Desjardins SecuritiesFebruary 21, 2019 Desjardins Securities analyst Frederic Tremblay thinks Savaria Corp. (SIS-T) “is not a broken story,” advising investors to “buy the dip” under the belief its 2019 guidance is achievable and 2020 is likely to show its “true potential.”
“Only six months have passed since the game-changing acquisition of Garaventa and, clearly, we have yet to see the true potential of Savaria’s global platform,” he said. “The revised 2019 guidance and our newly introduced 2020 forecasts demonstrate the positive impacts anticipated to emerge from changes at Garaventa Europe, an improving margin outlook at Span and continued strength in Savaria’s core accessibility business. We believe that the current valuation offers a good entry point.”
After dropping his financial estimates slightly for 2019 in reaction to Wednesday’s release of preliminary fourth-quarter results, which he feels were “broadly in line” with expectations, Mr. Tremblay lowered his target for the stock to $16 from $20. The average is now $17.
He maintained a “buy” rating for the stock.
“SIS trades at 12.0 times our 2019 and 10.5 times our 2020 EBITDA estimates,” he said. “This is at the bottom of the historical range. The SIS story remains attractive and we believe that solid execution would contribute to a multiple expansion.”