Carrier Connect Data Solutions: this analyst just hiked his target

Beacon Securities analyst Gabriel Leung raised his target on Carrier Connect Data Solutions (Carrier Connect Data Solutions  Stock Quote, Chart, News, Analysts, Financials TSXV:CCDS) to $3.75 from $3.00 after the company signed a five-year agreement covering the full capacity of its recently leased Georgia data centre.

In an Oct. 19 update, Leung maintained his “Buy” rating, calling the agreement a transformational development that significantly increases Carrier Connect’s revenue potential.

The Vancouver-based company signed an agreement with an undisclosed customer for all four megawatts of capacity at its Alpharetta facility, near Atlanta.  The contract follows a non-binding letter of intent announced in July for up to 25 megawatts of AI computing demand.

The customer has provided a multi-month deposit and is scheduled to begin deploying the first three megawatts on Nov. 1.

Leung said the initial deployment is expected to generate monthly billings of approximately US$1.05-million, or $1.48-million, including US$750,000 in service revenue and US$300,000 in pass-through electricity charges. That represents annualized billings of about $17.8-million.

The remaining one megawatt is expected to be deployed within three to six months, increasing monthly billings to approximately US$1.4-million, or more than $23.7-million annually. Carrier Connect expects the facility to generate EBITDA margins of 25% to 30% once operations stabilize.

Leung said the contract represents the first four megawatts of the previously announced 25-megawatt customer opportunity, leaving another 21 megawatts of potential demand.

The Alpharetta facility was also designed to accommodate up to 10 megawatts of power, subject to utility requirements and customer demand.

Leung argued that the site could support six megawatts with minimal additional capital spending, although further equipment would be needed to reach 10 megawatts.

The analyst noted that Carrier Connect remains in discussions about additional data centre and customer opportunities, with future capacity expected to be spread across more customers to reduce concentration risk.

Leung believes the agreement validates Carrier Connect’s business model and substantially increases its revenue scale from a previous annual run rate of approximately $5-million to $6-million.

He raised his financial estimates to reflect the contracted four-megawatt deployment, with further revisions possible as additional projects develop.

Leung expects Carrier Connect to generate negative Adjusted EBITDA of $1.1-million on revenue of $2.7-million in fiscal 2026, improving to Adjusted EBITDA of $1.9-million on revenue of $15.7-million in fiscal 2027.

His revised $3.75 target is based on 20 times fiscal 2028 EV/EBITDA.

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