This analyst likes Calian Group right now

Ventum Capital Markets analyst Rob Goff says Calian Group’s (Calian Group Stock Quote, Chart, News, Analysts, Financials TSX:CGY) acquisition of Galaxy Broadband Communications expands its defence and connectivity capabilities as Canadian defence spending ramps up.

In a June 26 update, Goff maintained his “Buy” rating and $100.00 target on Calian.

Calian entered a definitive agreement to acquire Galaxy Broadband, a Canadian provider of low-Earth-orbit satellite deployment, private wireless and multi-orbit connectivity services for government, defence, critical infrastructure and remote communities across Northern Canada.

“We look for further acquisitions by Calian and across its peers as sector leaders add capacity and capabilities ahead of the onslaught of incremental government spending,” Goff said.

The purchase price is up to $51.5-million, including $24.0-million up front, a $15.0-million base earnout and a potential $12.5-million supplemental earnout tied to outperformance over three years. Goff said the upfront valuation is likely below five times normalized EBITDA, in line with Calian’s average deal multiple.

Goff said the deal expands Calian’s communications and connectivity portfolio and aligns the company with NORAD modernization and Canada’s defence priorities. He estimates Galaxy’s revenue is roughly split between government and commercial customers, while the large earnout suggests key management will remain with the business.

Calian had $56.0-million in cash and last-12-month debt-to-EBITDA of 1.2 times, below management’s comfort level of up to 2.5 times. Goff said the upfront cash component is readily financed.

The analyst said Canada’s planned increase in annual defence spending from about $60-billion to roughly $180-billion, along with a shift to 70% Canadian sourcing from about 30% currently, should support further consolidation in the domestic defence supply chain.

“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 shift to direct dealings with the best-qualified parties,” Goff said. “We believe organic growth of 8-10% can be achievable and significantly increased through accretive on-strategy acquisitions.”

He forecasts fiscal 2026 revenue and Adjusted EBITDA of $874.5-million and $93.0-million, compared with consensus at $876.4-million and $92.4-million. For fiscal 2027, he expects revenue and Adjusted EBITDA of $944.8-million and $106.0-million, broadly in line with consensus.

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