More Revised Targets Scotia’s Michael Doumet lowered his ATS Corp. target to $54 from $61 with a “sector perform” rating, while Raymond James’ Michael Glen reduced his target to $60 from $65 with an “outperform” rating. The average on the Street is $64.43.
“ATS reset expectations for F25 — in a way, we believe, that clears a large part of the potential downside risk from Transportation,” he said. “The revised expectation for F25 suggests (i) lower sales, (ii) organic declines of more than 3.5 per cent (skewed to the 1H), and (iii) a 35-per-cent (of 45-per-cent) decline in Transportation, assuming more than 10 per cent (more than 15-per-cent) growth in the ‘other markets’.
“For a couple of quarters, it became apparent that EV sales would normalize following the revised capex intentions by OEMs. Those lowered expectations, we believe, have been largely absorbed by the shares’ valuation. At this point, the bull thesis is that expectations have been reset, valuation is reasonable, and that the overall mix has improved (away from Transportation). The bear argument is that the shares are not necessarily ‘cheap’ considering the apparent headwinds — i.e. potential high single-digit or double-digit organic declines in the near term. We are stuck between the two. We reduced our multiple to reflect lowered growth expectations but come away from the quarter/outlook more positive.”