This analyst just launched coverage of ATS with a “Buy”

Desjardins Securities analyst Frederic Tremblay says ATS (ATS Stock Quote, Chart, News, Analysts, Financials TSX:ATS) has room for multiple expansion as new leadership pushes further into services, margin improvement and growth areas such as radiopharma, nuclear and M&A.

As reported by the Globe and Mail, in a June 17 report, Tremblay initiated coverage of ATS with a “Buy” rating and $52.00 target. The average target on the Street is $49.33.

“ATS is a diversified leader in end-to-end automation solutions across multiple end-markets with high barriers to entry,” Tremblay said. “While customer capex cycles can drive revenue lumpiness, we view structural demand trends as robust.”

Tremblay said new leadership under CEO Doug Wright is sharpening ATS’ strategic focus, with emphasis on recurring, higher-margin services revenue, margin improvement and disciplined M&A.

The analyst said management’s fiscal 2027 outlook for modest revenue growth should not be read as a sign of weakening demand. Instead, he expects a temporary moderation from fiscal 2026’s six per cent organic growth, reflecting customer capital spending timing and the removal of $50-million of dilutive Transportation revenue.

“Underlying demand remains well-supported by broad-based automation needs, favourable structural drivers and ATS’ diversification,” Tremblay said.

Tremblay also said there is growth optionality in radiopharmaceuticals and nuclear. He said the Life Sciences segment is seeing rising demand from radiopharma, driven by cancer prevalence and precision medicine, while the Energy segment should benefit from a multi-decade nuclear cycle tied to CANDU refurbishment and emerging small modular reactor exposure.

Tremblay forecasts fiscal 2027 revenue of $3.0-billion, up 1.7% year-over-year, with growth reaccelerating in fiscal 2028 as comparisons ease and strategic initiatives gain traction.

He expects Adjusted EBITDA margin to improve to 14.4% in fiscal 2027 and 14.9 % in fiscal 2028, while free cash flow remains strong enough to support deleveraging and M&A.

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