Aecon Group Inc.’s (ARE-T) quarterly results came in shy of the Street consensus, but Raymond James analyst Frederic Bastien isn’t deterred, believing the stock has considerable upside given how cheaply it’s trading.
Aecon Group is Canada’s largest publicly traded construction firm. In March, it sold a minority interest in Bermuda Skyport and divested its Aecon Transportation East business.
Adjusted EBITDA of $25 million in its first quarter was below consensus of $27 million but still better than Mr. Bastien’s forecasts.
“On the back of two value-surfacing transactions last month, Aecon Group is well positioned to see through its challenging fixed-price work, address its maturing convertible debentures, and pursue new avenues for growth,” Mr. Bastien said in a note.
“With the impending close of these deals and the fact the first quarter is the seasonally weakest of the year, we would expect investors to look beyond the modest 1Q23 EBITDA miss. We still see our Outperform recommendation as appropriate for a firm that is miles ahead of the competition when it comes to sustainable construction, and trades well below its intrinsic value.”
He maintained a C$20 price target on the stock.