Buy Carrier Connect Data for 150% upside, this analyst says

Beacon Securities analyst Gabriel Leung says Carrier Connect Data Solutions’ (Carrier Connect Data Solutions Stock Quote, Chart, News, Analysts, Financials TSXV:CCDS) planned acquisition of Rochester Colo gives the company its first U.S. data centre foothold and adds another asset with available capacity to scale.

In a June 9 update, Leung maintained his “Buy” rating and $3.00 target on Carrier Connect. His target is based on nine times EV/full-utilization sales, compared with peers at about 11 times.

Carrier Connect announced it has entered into a definitive asset purchase agreement with Rochester Colo, LLC to acquire its data centre assets. The deal, first announced as a non-binding letter of intent on April 21, would be Carrier Connect’s sixth data centre acquisition and its first transaction in the United States.

Rochester Colo is generating about $885,000 in annual recurring revenue, with more than 60% capacity still available, suggesting maximum revenue capacity of more than $2.2-million. Leung estimates the facility, at about 40% utilization, is likely EBITDA breakeven to slightly positive.

Including Rochester Colo and the Morewave acquisition, Leung estimates Carrier Connect’s revenue run-rate now stands at about $5.5-million.

Carrier Connect is expected to pay $250,000 in cash, including a $25,000 deposit already paid, and issue 800,000 shares, which will be escrowed and released in four equal tranches over 24 months. Based on the prior close, Leung estimates the transaction value at about $1.3-million, or 1.5 times ARR, which compares favourably with Carrier Connect at 5.5 times and peers at 11 times.

“We are maintaining our estimates pending the close of the transaction (expected mid-August),” Leung said. “However, we do view this as another incremental positive for the company.”

Leung said recent marketing with management suggests Carrier Connect’s acquisition and organic customer pipeline remains active.

“Based on our recent marketing roadshow with management, we believe its M&A and organic customer pipeline remains full, which could drive additional positive news catalyst over the near-term,” he said.

Leung expects Carrier Connect to generate an Adjusted EBITDA loss of $1.1-million on revenue of $2.7-million in fiscal 2026, improving to an Adjusted EBITDA loss of $100,000 on revenue of $5.5-million in fiscal 2027. For fiscal 2028, he forecasts positive Adjusted EBITDA of $300,000 on revenue of $6.8-million.

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