Buy Firan Technology on weakness, this analyst says

Beacon Securities analyst Russell Stanley said in an Oct. 9 research note that Firan Technology Group (Firan Technology Group Stock Quote, Chart, News, Analysts, Financials TSX:FTG) remains attractively valued despite an earnings miss that he said “obscures strength in bookings and cash flow.”

He maintained a “Buy” rating and $17.00 target price for the Toronto-based circuit board and aerospace manufacturer.

Stanley said he views the stock’s 8% decline on 2.5× normal trading volume as a buying opportunity.

“Exacerbated by today’s risk-off environment, we believe the sell-off indicates investors are overlooking some crucial data points,” he said. “Importantly, management reiterated that demand continues to be strong across its end markets.”

FTG reported Q3 revenue of $47.7-million and Adjusted EBITDA of $7.7-million, in line with Beacon’s forecast of $47.4-million and $7.8-million but slightly below consensus at $48.3-million and $8.0-million. Adjusted diluted EPS was $0.11 per share, versus $0.09 per share expected. Stanley noted that delays in product shipments for China’s C919 aircraft program weighed on quarterly results but that production is expected to catch up in subsequent quarters.

Free cash flow reached $5.4-million, the strongest in Beacon’s look-back period, while cash flow conversion rebounded to 85%, above the 61% four-quarter average. Bookings climbed 12% year over year and sequentially to $51.5-million, yielding a solid book-to-bill ratio of 1.08. The backlog stood at $137-million, up 13% year over year and 3% quarter over quarter, with 88% expected to convert to revenue within 12 months.

Stanley highlighted ongoing strength across all end markets, including aerospace and defence, and cited “further pull-through demand to come” tied to potential production increases at Boeing and new U.S. Navy programs.

“We continue to view FTG as very attractively valued relative to its closest peer, TTM Technologies,” he said, noting that FTG trades at a 44% discount to TTMI based on fiscal 2026 EBITDA multiples despite offering triple the forecast growth rate.

Management also announced several leadership changes, including the appointment of Drew Knight as CFO, effective Oct. 27, as well as new facility leaders at four North American sites. Stanley said FTG remains focused on expanding in Europe through potential acquisitions, with a strategic eye on greater penetration with Airbus and exposure to increased European defence spending.

Stanley said FTG should generate $34.1-million in Adjusted EBITDA on $192.0-million in revenue in fiscal 2025, improving to $41.8-million on $214.1-million in fiscal 2026.

He said upcoming catalysts include new contract wins, certifications, potential M&A, and the company’s Q4 results in February.

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