Ventum trims price target on Calian Group

Ventum Capital Markets analyst Rob Goff said in an August 14 update that he is maintaining his “Buy” rating on Calian Group (Calian Group Stock Quote, Chart, News, Analysts, Financials TSX:CGY) but lowering his target price to C$58.00 from C$60.00 following a reduction in his fiscal 2026 Adjusted EBITDA forecast by $7.9-million to $86.0-million.

He said the price target cut is moderated by expectations for stronger momentum in the second half of fiscal 2026 and potential upside from a large military RFP win.

“For the second consecutive quarter, results for Q3/F25 were below our forecasts and consensus, with disappointing performance within (the company’s Information Technology and Cyber Solutions segment),” Goff said.

While ITCS revenues fell 10% year-over-year, the rest of the business posted 9% revenue growth and 10% EBITDA growth, versus consolidated growth of 4% in revenue and a 7% EBITDA decline. Defence Solutions delivered double-digit organic growth, and the company’s $1-billion-plus defence pipeline includes undisclosed European NATO wins. Backlog rose $50-million in the quarter, bringing gains over the last three quarters to $260-million toward the $1.5-billion total.

Goff said Q3/F25 revenue, gross profit, and Adjusted EBITDA were $192.2-million, $66.9-million, and $19.0-million, respectively, compared with his forecasts of $209.3-million, $69.3-million, and $24.0-million, and consensus at $207.4-million, $68.2-million, and $23.3-million. Gross margin was 34.8%, up from 33.4% last year, reflecting delayed high-margin manufacturing deliveries in Advanced Technologies. Adjusted EBITDA margin was 9.9%, down 80 basis points year-over-year, weighed down by ITCS EBITDA of $0.4-million, compared with his forecast of $4.9-million and $2.9-million a year earlier.

“Investors will weigh negative short-term momentum against the building tailwind in significantly higher military spending looking further out,” he said. “We are maintaining our ‘Buy’ rating and reducing our PT to $58.00, viewing any share price weakness on near-term results as a buying opportunity given medium-term growth visibility and margin recovery potential. While a contrarian call and one that is likely early, we see the potential for H2/F2026 forecasts to be upgraded with higher military spending offsetting a tough start to the year.”

Goff said Calian should generate $77.0-million in Adjusted EBITDA on revenue of $748.3-million in fiscal 2025, down from his prior forecast of $83.8-million on $769.3-million. He expects those figures to improve to $86.0-million on $798.8-million in fiscal 2026, compared with previous estimates of $93.9-million on $849.3-million.

With the Canadian defence budget expected in September, Goff said he anticipates more clarity on available funds and potential new RFPs. The $50-million in new contracts announced last quarter represented about $25-million of incremental work, including a significant U.K. deal. He views the 2024 acquisition of Mabway as well-positioned for higher NATO spending and cross-selling opportunities.

“We would expect that the strong pipeline growth included NATO wins that cannot be disclosed for security reasons.”

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