ATS Corp is a buy, this analyst says

Stifel analyst Justin Keywood on Oct. 8 maintained his Buy rating and C$52.00 target price on ATS Corporation (ATS Corporation Stock Quote, Chart, News, Analysts, Financials TSX:ATS), citing strong life sciences momentum, improving leverage, and a supportive valuation backdrop following SoftBank’s acquisition of Switzerland-based technology company ABB’s robotics division.

SoftBank’s purchase of ABB’s robotics unit at 2.4× sales and 17.2× EBITDA highlights the value being placed on automation assets tied to AI-driven manufacturing.

Keywood said the transaction underscores “greater valuation potential for ATS,” which trades at only 12× NTM EBITDA amid what he described as an electric vehicle “unwind, a CEO transition, and elevated leverage of roughly 3.5×.”

He said life sciences results should inflect in fiscal Q2, reported in November, with consolidated sales expected to rise 17% year-over-year as rapid deleveraging continues.

Cambridge-based ATS designs and builds factory automation systems, with more than 60% of revenue tied to life sciences customers. The company integrates proprietary robotics and systems with digital services and supplier components, focusing on complex automation lines used in diagnostics, medical technology, and pharmaceutical manufacturing.

Keywood said that several ATS clients have committed more than US$350-billion in U.S. manufacturing investments this year, supporting sustained automation demand. He expects life sciences sales to grow organically at a low- to mid-teens rate over the next 12 months, with consolidated margins expanding 50–80 basis points as the mix shifts toward higher-margin segments.

Roughly 10% of ATS’s recent sales are derived from automation lines for GLP-1 auto-injectors. While investors have expressed concern following positive oral-GLP-1 trial results, Keywood said new indications beyond obesity and regulatory approvals for treating MASH (Metabolic dysfunction-Associated SteatoHepatitis) will broaden demand.

He added that the company’s radiopharma unit continues to gain traction and is expected to outpace GLP-1 growth in the coming quarters.

EV-related revenue is now stable at 7–10% of sales after falling from over 30% two years ago. Keywood said that the segment’s unwind and a negotiated A/R settlement had temporarily lifted leverage, but he expects net-debt-to-EBITDA to fall from 3.5× to 3.0× within three quarters. He also noted that the surprise CEO change in July has had little operational impact, given the company’s decentralized structure and experienced management bench.

Keywood said valuation remains attractive, with ATS trading at 12× NTM EBITDA compared with automation peers averaging 16×. His DCF analysis implies fair value “in the C$50s,” supported by upcoming growth quarters, margin expansion, and potential tuck-in acquisitions.

He said ATS generated C$369-million in Adjusted EBITDA on C$2.68-billion in revenue in fiscal 2025 and expects those figures to improve to C$408-million and C$2.95-billion, respectively, in fiscal 2026.

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