Craig-Hallum - Stock Opportunity summaryUS investors appear to value stocks more agressively than their Canadian counterparts. This is reflected by analysts reports. As a counter to TD's report, here is the perspective from Craig Hallum who are taking a more forward looking approach.
Craig-Hallum has a $6USD target price (was $7USD) , in summary;
STOCK OPPORTUNITY
Xebec should see meaningful multi-year growth as its products, services and
projects capitalize on the secular shift towards RNG and hydrogen driven by
sustainability goals, government policy (LCFS in the U.S., CFS in Canada), and
gas utilities facing the threat of customer loss due to electrification. Longer term,
we think the company can generate ~C$300M in revenue, ~C$80M in EBITDA,
and ~C$0.50 in EPS in the coming years We think this supports a share price of
US$10-US$12 over the medium term (5x EV/S, 20x EV/EBITDA, 30x P/E).
Our one-year price target of US$6 is based on a ~6.5x EV/S multiple on CY22E,
with the treasury method on all in-the-money equity equivalents. We believe this
multiple is appropriate given the secular growth shift globally towards RNG,
meaningful revenue growth and profitability expected (with profitability
something that is hard to come by in the cleantech space), and valuation relative
to comparable companies (~13.5x, which would result in a $12 stock price).