A very positive analyst upgrade, Feb.5, 2018 Raymond James' Frederic Bastien added Bird Construction Inc. (BDT-T) to the firm's "Canadian Analyst Current Favourites" list.
"Our Best Pick for 2018 trades at a big discount to the contractors' average forward EV/EBITDA [enterprise value to earnings before interest, taxes, depreciation and amortization] multiple, which we believe is unreasonable for a company with renewed momentum in Canada's public-private partnership (P3) sector and significantly improved industrial prospects," said Mr. Bastien. "On the one hand Bird landed most P3s it was vying for in 2017 and, by our count, made the shortlist on ten more design-build opportunities that will be tendered in 2018. On the other, the well-run company is bidding on progressively more jobs in Alberta's mid-stream oil and gas market and in Quebec's iron ore belt.
"Just as importantly, the firm has recently strung together small contract wins in new verticals (nuclear power and mechanical processing) and positioned itself for lithium and gold related opportunities in Canada's North. These gains, in our view, are evidence that management's efforts to diversify the business and produce consistently superior returns for its shareholders are starting to bear fruit."
Mr. Bastien has an "outperform" rating and $12 target price for Mississauga-based Bird. The average target on the Street is currently $11.25, according to Thomson Reuters data.