Calian Group gets new $100.00 price target at Ventum

Ventum Capital Markets analyst Rob Goff says Calian Group (Calian Group Stock Quote, Chart, News, Analysts, Financials TSX:CGY) remains well positioned to benefit from sustained increases in Canadian defence spending.

In a June 15 update, Goff maintained his “Buy” rating on Calian and raised his target to $100.00 from $94.00

“We are confident in moving our PT from $94 to $100, consistent with our ongoing thesis that forecasts/expectations and prospective valuations leave upside given the certainty and strength of sustained double-digit growth in annual defence spending,” Goff said.

Goff said management remains bullish on the federal government’s commitment to raise annual defence spending from about $60-billion to roughly $180-billion before its 2035 target. He said the shift should be further supported by a move to 70% Canadian sourcing from about 30% currently.

While spending deployment will take time, Goff said the near-term impact is already showing up in renewals with government customers that now have more confidence budgets will increase. Health services are also expected to recover as defence enrollment improves, helped by higher compensation, housing allowances and better medical care.

“Looking further ahead to the stronger tailwind, we look for government moves to increase the speed to deployment of defence expenditures, where cumbersome cross-department RFP processes could move to direct dealings with the best-qualified parties,” Goff said.

Goff said organic growth of 8% to 10% looks achievable, with upside from acquisitions. Calian has a strong acquisition pipeline and a balance sheet with room to deploy capital, with last-12-month debt-to-EBITDA at 1.2 times against management’s comfort level of up to 2.5 times.

The analyst said Calian has meaningful excess manufacturing capacity in British Columbia, Ontario and Saskatchewan, with Montreal expected to expand capacity next year. He sees the company working with prime contractors on larger enterprise bids while also taking a de facto prime role on smaller and mid-sized opportunities.

Goff forecasts fiscal 2026 revenue and Adjusted EBITDA of $874.5-million and $93.0-million, compared with consensus at $875.5-million and $92.0-million. For fiscal 2027, he expects revenue and Adjusted EBITDA of $944.8-million and $106.0-million, broadly in line with consensus at $941.3-million and $106.0-million.

“We believe expectations leave modest upside, discounting the fundamental positive recalibration of the sector spending,” Goff said.

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