This analyst loves Stingray Group

Stingray Group (Stingray Group Stock Quote, Chart, News, Analysts, Financials TSE:RAY.A) shares pulled back  following third-quarter fiscal 2026 results, a move Desjardins Securities analyst Jerome Dubreuil called “unjustified,” as he raised his price target to $21.50 from $18.50 and reiterated a “Buy” rating.

“Beyond the broader negative market sentiment toward tech stocks, we view [Wednesday’s] 4% pullback as unjustified, given our expectation for a consensus uplift, the constructive tone of the conference call, stronger-than-anticipated synergy realizations to date and deleveraging,” Dubreuil said. “Even without multiple expansion, we derive an expected total return CAGR north of 20%.”

Montreal-based Stingray reported Q3/F2026 results on Feb. 10, posting revenue of $124.8-million, up 15.4% year-over-year, and Adjusted EBITDA of $44.5-million, up 5.7%. Adjusted EBITDA margin came in at 35.7%, compared with 38.9% a year earlier, reflecting lower gross margins tied to recent acquisitions. Adjusted net income rose 12.2% to $26.3-million, or $0.38 per diluted share, while Adjusted free cash flow increased 21.5% to $34.8-million.

Organic growth in Broadcast and Recurring Commercial Music revenue rose 8.5% year-over-year. Broadcasting and Commercial Music revenue climbed 22.0% to $88.1-million, driven by advertising contributions from the TuneIn acquisition, higher equipment sales related to The Singing Machine, and stronger FAST channel revenue. Radio revenue rose 2.0% to $36.7-million on higher digital sales.

Net income declined to $7.5-million, or $0.11 per diluted share, largely due to higher performance-based compensation and acquisition-related expenses.

The company’s net debt to Pro Forma Adjusted EBITDA improved to 2.49x from 2.54x a year earlier. Stingray also repurchased and cancelled 303,700 shares for $3.8-million during the quarter. TuneIn synergies have reached an annualized run rate of US$16.0-million in revenue and US$5.0-million in cost savings.

President and CEO Eric Boyko said record revenue, Adjusted EBITDA and Adjusted free cash flow “highlight the significant positive impact” of the TuneIn acquisition and continued expansion in FAST channels and in-car entertainment. He pointed to new automotive partnerships with BYD, Mercedes-Benz and Nissan as validation of Stingray’s connected car strategy.

Stingray closed February 10 with $17.3-million in cash and access to $519.7-million in credit facilities. The board declared a dividend of $0.085 per share payable March 13, 2026.

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