Alithya Group wins price target raise at Ventum

Ventum Capital Markets analyst Rob Goff raised his price target on Alithya Group (Alithya Group Stock Quote, Chart, News, Analysts, Financials TSX:ALYA) to C$2.75 from C$2.50 in a June 13 note, citing stronger-than-expected fourth-quarter results and the accretive acquisition of eVerge as key drivers behind improved forecasts.

Goff said the company delivered margin outperformance and year-over-year growth in Canadian financial services, while its return to M&A, with two strategic acquisitions totalling $68.3-million, marks a shift after three years of organic focus.

He is maintaining his “Buy” rating.

“We are pleased with the accelerated return to growth driven by the solid contributions from XRM and organic momentum in Canada,” Goff said. “We further believe that YoY margins should continue to progress higher as the business mix evolves towards more value-driven contracts and where both XRM and eVerge are margin accretive. The gross profit and EBITDA outperformance was in part attributed to a $1.0M tax recovery plus positive provisions related to prior-period contract provision allowances. However, the revenue gains, together with efficiency measures, clearly supported outperformance in the quarter. The positive contract provision allowances reflected tightened contract budgeting across the organization where negative provisions have been recorded in years past.”

XRM and eVerge are complementary acquisitions that expand Alithya’s CRM capabilities across Microsoft, Oracle, and Salesforce platforms, giving the company access to a broader enterprise market. Alithya has already secured larger contracts through XRM than either firm could have achieved alone, and expects similar gains from eVerge. Organic growth is expected to pick up in the second half of fiscal 2026, helped by increased scale and the ability to bid on larger contracts that were previously out of reach.

“We anticipate ongoing margin strength as ALYA continues to prioritize higher-margin value-add business, while the expansion of its ‘smart shoring’ initiatives and their reduced labour cost profile will further drive G&A lower and support incremental margin expansion in F2026,” Goff said. “We believe ALYA is set to leverage its cost-efficient platform where roughly 12% of its employees are now offshore against ~6% one year ago and where the US represents roughly 42% of revenues while US employees are at ~26% of the total.

“We are maintaining our ‘Buy’ rating while raising our PT by $0.25 to $2.75, where organic momentum, together with the two accretive acquisitions, support positive forecast revisions.”

Goff expects Alithya to generate $47.7-million in Adjusted EBITDA on $473.5-million in revenue for fiscal 2025. He forecasts those figures will improve to $55.0-million in EBITDA on $509.9-million in revenue in fiscal 2026.

Alithya reported Q4 fiscal 2025 revenue of $125.3-million, gross profit of $46.1-million, and EBITDA of $18.0-million, beating both Ventum’s forecasts ($118.3M/$38.3M/$11.2M) and consensus estimates ($119.0M/$37.2M/$10.9M). Goff said Ventum made modest revisions to its model to reflect the recent eVerge acquisition.

“Based on an implied purchase multiple of 5-7x EBITDA, we project eVerge will add roughly $20M of annual revenue,” Goff said. “We estimate gross and EBITDA margins at roughly 40% and between 15-20% versus our estimates of 50% and 25% for XRM, respectively. Consequently, we see upside to our baseline F2026 gross margin of 33.5%, ahead from 33.0% for F2025 (recognizing it was boosted by ~0.8-0.9% from the one-time gains and positive contingency reversal).”

Ventum now forecasts fiscal 2026 revenue of $509.9-million, gross profit of $170.9-million, and EBITDA of $55.0-million, up from the pre-quarter consensus of $490.8-million, $157.8-million, and $46.2-million, respectively. The firm said these revisions reflect Alithya’s focus on integrating eVerge and targeting higher-margin contracts. ALYA shares trade at 5.4x 2025 EV/EBITDA, below consulting peers at 9.8x, IT services peers at 9.0x, and international peers at 9.9x.

“We look for continued growth and expanding gross profit margins as ALYA moves its valuation more in line with its consulting peers (~35%). A 23% FCF yield provides downside protection and leaves sufficient liquidity for tuck-in deals or capital returns through share repurchases,” Goff said.

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