Raised Targets In a research note titled This is not your father’s Atkins (or SNC), National Bank Financial analyst Maxim Sytchev said he has “Growing confidence in better days ahead” for AtkinsRalis Group Inc. , believing the market is getting “more comfort” with its forward trajectory and seeing an “enhanced level of confidence in hitting the margin targets [and the] only risk is material capital deployment once 407 is gone.”
Shares of the Montreal-based engineering giant surged 5.8 per cent on Thursday after it revealed at its Investor Day event that is aiming to sell its stake in Toronto’s Highway 407 ETR toll road within three years as it pushes on with a strategic revamp it says has re-energized the business.
“Management presentations, strength of the underlying market (as seen from ALL the competitors), and the changed set-up for the nuclear business (confluence of more supportive Net Zero transition policies and sequencing of reactor refurbishments/potential new builds), makes us think that further share price appreciation should be achievable, especially in the context of sell-side estimates not fully baking in the new 2027E guidance,” said Mr. Sytchev. “The only risk to the investment thesis is capital deployment as we did not get a good sense of whether ‘strategic’ M&A would be more important than ‘accretive’ M&A (or share buybacks for that matter). The latter risk is likely a late 2025/early 2026 dynamic, but we nevertheless still want to be fully alert to it as we are loath to see ‘peak’ EBITDA in “peak” geography dynamic circa 2026.
“At the same time, this is still almost two years out and, in the meantime, investors should be able to benefit from 50 basis points per annum of Engineering margin improvements and better FCF. $450-milion-$500-million potential at a 3.5-per-cent FCF yield equal a $13.5-billion market cap, implying $70-$75 per share by 2027. While this is not happening tomorrow, the direction of travel is less murky; as a result, we are increasing our EV/EBITDA multiples in Engineering/Nuclear to 13 times/12 times (from prior 12 times and 10 times – for context, we are using 16 times for WSP).”
Maintaining an “outperform” recommendation for AtkinsRalis Group, formerly SNC-Lavalin, shares, he raised his target to $67 from $61. The average target on the Street is $63.45.
Elsewhere, other analysts making target changes include:
* Canaccord Genuity’s Yuri Lynk to $64 from $62 with a “buy” rating.