Is ATS stock a buy right now?

ATS (ATS Stock Quote, Chart, News, Analysts, Financials TSX:ATS) is expected to report a solid fiscal Q1 in early August, with life sciences continuing to lead growth, according to Stifel analyst Justin Keywood, who maintained a “Buy” rating and $52.00 price target in a July 17 note. The company’s exposure to electric vehicles (EVs), which peaked at 34% of sales 18 months ago, has now declined to 7–10% and is more diversified across multiple OEMs.

Stifel forecasts Q1 revenue of $711-million, flat year over year, with life sciences up 21% and EV-related sales down 50%. Adjusted EBITDA margin is expected to come in at 13.8%, up from 13.5% last quarter, with margins projected to expand by about 100 basis points over the next 12 months. Free cash flow could hit a record $200-million, helped by a $193-million EV settlement tied to legacy automation projects for GLP-1 autoinjector devices, and is expected to reduce net leverage from 3.9x to about 3x over the next three quarters.

Keywood noted that the recent announcement of CEO Andrew Hider’s departure may pause near-term share re-rating, even as automation peers reach new highs. CFO Ryan McLeod will serve as interim CEO.

“Baxter (NYSE: BAX) also announced that Mr. Hider will be CEO, effective September,” Keywood said. “Mr. Hider has been a strong driver of value at ATS, including improving culture and positioning ATS as a decentralized organization with some similar aspects to Danaher, where he was previously.”

Despite the leadership change, Keywood expressed confidence in the company’s bench strength and said ATS is nearing a financial inflection point. He added that the EV segment’s decline has masked ongoing momentum in life sciences, particularly in areas like nuclear medicine, which now accounts for about 60% of total sales.

The M&A pipeline remains active, and Keywood sees no significant change to near-term tuck-in acquisition activity, noting the company’s access to over $650-million in unused credit and $225-million in cash. Larger platform acquisitions may slow depending on capital costs, but the company’s ability to scale could further boost margins and strengthen its position as a pure-play life sciences automation firm.

Keywood also expects steady organic growth of 8–10% in the near term, supported by a growing mix of higher-margin life sciences revenue. While quarterly margin gains may be modest — around 20 basis points each quarter — he said the steady pace of improvement, along with strong EBITDA growth, puts ATS on solid footing heading into fiscal 2026.

Keywood said that ATS reported $369.0-million in Adjusted EBITDA on $2.68-billion in revenue for fiscal 2025. He expects those figures to improve to $413.1-million in Adjusted EBITDA on $2.92-billion in revenue in fiscal 2026, down slightly from his previous estimates of $433.0-million and $2.94-billion, respectively.

Keywood said ATS is trading at 13.9 times its projected 2025 EBITDA, compared to 16.2 times for its peers. That’s down from its peak of 15.7 times about 18 months ago, before the EV business started to decline.

“We see valuation expanding with a combination of organic growth, margin expansion and deleveraging with M&A serving as potential catalysts,” he said. “We narrow our F2026 forecasts, including 60bps reduction in Adj. EBITDA margin from 14.7% to 14.1%, though we leave room for ~20bps/qtr in sequential margin improvement over the NTM from our new FQ1 baseline of 13.8% (from 14.0%). Our FY sales estimate edges down from +10% growth to +9%. FCF boosts, incorporating the C$193mm EV settlement in FQ1. FQ1 sales we leave largely unchanged. Our C$52 target is maintained, based on 14x our F2026E EBITDA.”

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