Two Upgrades People Corp. (PEO-X) is a "growth story with defensive attributes," said Desjardins Securities analyst Gary Ho.
"PEO reported 1Q FY20 results which were slightly below our estimates; however, organic revenue growth remains strong (up 8.3 per cent) and we expect lower AIR costs in 2Q," said Mr. Ho in a research note. "We maintain our positive thesis given PEO's defensive attributes, secular industry tailwinds and a track record of sustained organic revenue growth, supplemented by a healthy M&A pipeline."
Maintaining a "buy" rating, he increased his target for shares of the Winnipeg-based management consulting company to $12 from $11.25. The average is $11.83.
"Our investment thesis is predicated on the following: (1) favourable industry tailwinds have been providing stable organic growth; (2) PEO has a proven acquisition history and if excess capital is put to work, this could provide upside to our target; (3) its TPA platform presents a unique value proposition; and (4) over the medium to long term, PEO is primed to be a takeout candidate," he said.
Elsewhere, Canaccord Genuity's Scott Chan increased his target to $11.50 from $11 with a "buy" rating (unchanged).