expanded Analyst Comments from G&M March 22 2024 RBC’s Geoffrey Kwan cut his ECN Capital Corp. (ECN-T -26.45%decrease
) target to $2.25, below the $2.80 average, from $3, keeping a “sector perform” rating. Other changes include: National Bank’s Jaeme Gloyn to $2 from $2.75 with a “sector perform” rating and TD Securities’ Mario Mendonca to $2.75 from $3 with a “hold” rating.
“We have a negative view on Q4/23 results, which were well below our forecast,” said Mr. Kwan. “While ECN is optimistic regarding a rebound in growth in 2024, its 2024 EPS guidance was cut by almost 50 per cent despite being reaffirmed last quarter. There were several other developments from Q4/23 results (e.g., continued significant negative fair value hits to revenue from prior risk management issues; CFO departure; Boat/RV sale or spin-off no longer happening, delayed and potentially slower rollout of SKY JV). We previously expected the Boat/RV business to be sold or spun-off (per ECN’s intention) and that might precipitate SKY or another party acquiring ECN in the near term, but with the Boat/RV business no longer being sold/spun-off, although this may still happen, it looks unlikely for now. In the long term, we think ECN’s shares could experience significant valuation upside, but in the near term, we view earnings visibility as low given recent fundamental challenges which contributed to the substantial decrease in 2024 EPS guidance and that it’s still unclear how fast and how much origination demand improves in 2024.”