ATS Automation (ATS Automation Stock Quote, Chart, News, Analysts, Financials TSX:ATA) has come a long way over the past three quarters, but there should be more upside as the valuation gap narrows between it and its industry peers. That\u2019s according to Stifel GMP analyst Justin Keywood who delivered an update to clients on Thursday, saying the company has a number of high-growth quarters ahead. Cambridge, Ontario-headquartered ATS Automation is a custom automation and integration solutions and services company for businesses in a range of markets including life sciences, food and beverage, transportation, consumer products and energy. ATS has over 5,000 employees worldwide with 28 facilities across 20 countries and a current market cap of 3.1 billion. The stock started climbing this past November where it rose from $20.00 to now above $35.00. But Keywood is expecting more and has reasserted a \u201cBuy\u201d rating while raising his target from $43.00 to $45.00 per share, which at the time of publication represented a projected 12-month return of 25 per cent. \u201cATS remains on our top picks list with the stock up 64 per cent year-to-date and near an all-time high,\u201d Keywood wrote. \u201cDespite the outperformance, ATA\u2019s valuation is still relatively low, compared to peers at 14x 2021 EBITDA versus ~20x.\u201d \u201cWe believe a strong investment case remains for ATA as an end-to-end automation provider in high valued verticals with solid growth ahead in the current rising cost environment. We also see ATS\u2019 early focus on ESG practices as important in broadening the potential shareholder base at higher market cap levels,\u201d he said. \u201cOverall, we expect a combination of industry tailwinds, continued M&A, solid growth quarters and a fading legacy investor view as leading to higher valuation,\u201d Keywood wrote. By the numbers, Keywood is estimating ATS\u2019 fiscal 2022 and 2023 revenue (year end March 31) at $1.95 billion and $2.13 billion, respectively, and 2022 and 2023 EBITDA at $275.1 million and $316.3 million, respectively. The analyst said he\u2019s expecting 37-per-cent year-over-year growth in sales and 44-per-cent growth in EBITDA over the next 12 months. \u201cOur sales forecast includes ten per cent organic growth, which we see as conservative, with the remaining attributable to recent M&A. Our 37-per-cent growth forecast, combined with 14-per-cent EBITDA margins, sums to 51-per-cent and exceeds the Rule of 40, which we see as leading to a premium valuation,\u201d Keywood wrote. On the M&A front, ATS announced in April an agreement to acquire automated fluid dispensing systems manufacturer BioDot for about $106 million, completing the acquisition on June 1, and then acquired on June 2 Control and Information Management, an Ireland-based industrial automation system integrator. Going forward, Keywood said ATS has a wide acquisition pipeline of over 30 assets including some larger deals and that the company\u2019s current resources for M&A are between $400 and $600 million. \u201cDeleveraging can happen relatively quickly with a 1x turn in net debt\/EBITDA per year. We see further M&A as catalysts, given the track record of success with $600 million recently deployed and supporting high growth forecasts,\u201d Keywood said. On the macro scale, Keywood said rising costs and a tight labour market should continue to push companies into greater automation to drive efficiencies, while the overall shortening of supply chains will also drive automation. \u201cATS operates in high valued verticals within the automation industry (healthcare, food, nuclear) and is expected to benefit from these tailwinds,\u201d Keywood wrote. Along with these wider factors, the analyst said his high conviction on the company and stock comes from his faith in management, which continues to provide solid execution, pointing in particular to ATS\u2019 stated goal of improving margins by 500 basis points, half of which has now been accomplished. \u201cAlmost every metric has improved substantially with the current management team, including at least 40 per cent growth in each of sales, bookings, backlog and cash flow,\u201d Keywood said. Finally, Keywood shone a light on ATS\u2019 Environmental, Social and Governance (ESG) credentials, saying the company ranks well by Stifel\u2019s ESG framework and analysis. Keywood noted that ESG is becoming an increasing focus for investors and can make up a broad set of criteria that can direct fund flows into investment. ATS last reported earnings on May 20, where the company\u2019s fiscal fourth quarter featured revenues up 4.7 per cent year-over-year to $399.9 million and EBITDA of $60.2 million compared to $43.2 million a year earlier. The company said its order backlog increased by 23 per cent to $1.160 billion by the end of March compared to $942 million a year earlier. For the full fiscal 2021, ATS\u2019 revenue was flat year-over-year at $1,430.0 million compared to $1,429.7 million for fiscal 2020.