Alithya Group is undervalued, this analyst says

Ventum Capital Markets analyst Rob Goff says Alithya Group’s (Alithya Group Stock Quote, Chart, News, Analysts, Financials TSX:ALYA) strategic review could draw investor attention to the gap between its public valuation and potential strategic value.

In a July 27 update, Goff maintained his “Buy” rating and $2.00 target on Alithya.

Alithya has launched a strategic review, saying the undervaluation of its shares limits its ability to create shareholder value through acquisitions.

“We expect the market to cautiously discount the prospects of the Company’s inclusion of sale or privatization amongst its stated potential outcomes,” Goff said.

The analyst said the range of possible outcomes also includes strategic investments, partnerships or a recapitalization.

Goff said competitive pressure in Canada has overshadowed Alithya’s progress in building a higher-value U.S. business. Canadian revenue declined about 21% from fiscal 2024 to fiscal 2026, reflecting the completion of a large contract and the company’s decision to avoid overly competitive work. Over the same period, U.S. revenue grew about 21%, with EBIT up 41.7%.

“While we see a return to growth with stabilization in Canada and growing scale in the US, a fuller revaluation of the shares will likely await positive YoY gains in financials, excepting takeover or privatization considerations,” Goff said.

He said Alithya shares remain attractive, with a fiscal 2027 free cash flow yield of 28% limiting downside and potential strategic activity offering upside.

Goff expects fiscal Q1 2027 revenue of $113.9-million and Adjusted EBITDA of $9.4-million, slightly below consensus at $114.7-million and $9.8-million. For the full year, he forecasts revenue of $458.6-million and Adjusted EBITDA of $43.1-million.

Alithya trades at 5.1 times and 4.8 times calendar 2026 and 2027 EV/EBITDA, respectively. Goff said North American consulting and IT/business services peers trade at 5.8 times and 8.5 times calendar 2027 EV/EBITDA.

He also pointed to recent transactions in the sector, with Converge and Quisitive acquired at about 7.6 times and 6.1 times next-12-month EV/EBITDA, respectively.

Goff said his $2.00 target reflects a steep discount to his $2.70 discounted cash flow valuation, reflecting the need for stronger revenue momentum while still offering the prospect of significant returns.

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