RE:Price targets
Cormark...
Macro (MCR-V, $4.08) –Last night Macro reported Q1/19 results. Top-line revenue of $121.6 MM essentially matched our forecast of $123 MM while EBITDA of $13.5 MM was modestly below our $17.2 MM forecast.
Macro had guided to some margin compression following a very strong result in Q4; however, with existing contracts rolling off and Coastal GasLink representing a minor amount of revenue in the first quarter, we don’t see Q1 as indicative of normalized results. As activity accelerates into 2020, the company expects to see margins stabilizing and improving as efficiencies are achieved later this year.
On the back of its recent Saturn compressor project award, revenue guidance for 2019 now stands at $350 MM+ (versus $300 MM+ previously), with the forecast for the year not including any provision for the Trans Mountain Pipeline expansion (TMX) project. We believe that a decision by the federal government to proceed with TMX, potentially announced on June 18, would represent a key catalyst for the stock as we (conservatively) have ~$0.90/sh in value for the project included in our target price.
With its exceptionally strong balance sheet and exposure to major pipeline contracts (that have a high probability of being upsized), we continue see Macro as a very compelling small cap services name. – Buy, $5.50 Target