Is ATS stock a buy right now?

Stifel analyst Justin Keywood says ATS Corporation’s (ATS Corporation Stock Quote, Chart, News, Analysts, Financials TSX:ATS) stepped-up share buyback activity suggests management sees value after a sharp pullback in the stock.

In a Sept. 14 update, Keywood maintained his “Buy” rating on ATS with a $26.40 target.

ATS shares are down about 30% year-to-date, compared with a roughly 20% gain for automation peers. Keywood said the decline reflects revenue headwinds from GLP-1 and electric vehicle programs, a weak fiscal Q1 and an 18-month restructuring plan.

The analyst said ATS is likely still a 2027 story without M&A, but underlying developments point to a potential rebound.

Those include Novartis’s PLUVICTO label expansion, Merck’s KEYTRUDA momentum and a record pace of FDA approvals, which Keywood views as a leading indicator for life sciences demand.

Life Sciences represents about 60% of ATS sales. Keywood said its trailing-12-month book-to-bill ratio, excluding GLP-1, is above 1.10 times, while radiopharmaceutical backlog has doubled.

ATS announced Sept. 3 that it had repurchased 1.1-million shares at an average price of $27.97, for a total of $31.3-million. The company can buy back up to 8.2-million shares under its normal course issuer bid.

Keywood said the buybacks support the view that headwinds are largely priced in, with the stock near five-year lows and trading at about 10 times EBITDA.

He expects fiscal Q2 results, due in November, to remain pressured, but said bookings could improve in the second half of fiscal 2027.

ATS’s leverage has fallen to 2.9 times from nearly four times a year earlier. Keywood expects leverage to move to the low-two-times range by the end of fiscal 2027, supported by better working capital as EV programs wind down and margins improve.

The analyst said the balance sheet supports continued buybacks and future tuck-in or bolt-on acquisitions.

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