National Bank Raises MDF Target to $3National Bank Assesses MDF Commerce's Sale of InterTrade Systems Raises Target to $3
2022-10-05 02:03:50 PM ET (MT Newswires)
02:03 PM EDT, 10/05/2022 (MT Newswires) -- MDF Commerce announced that it closed the sale of its wholly owned subsidiary - InterTrade Systems to SPS Commerce for gross proceeds of $65.8 million (US$48.5 million) in an all-cash transaction.
"In our view, that's an attractive valuation given the growth profile of this business (~5% Y/Y in FQ1'2023)," writes National Bank analyst Richard Tse, who has a moderate view on MDF. "We view this transaction positively in that it deleverages MDF Commerce's balance sheet, while honing its focus on its two core platforms of ecommerce and eprocurement."
Still, it is premature to conclude the remaining businesses are fundamentally undervalued as the divested business had a mid-20s EBITDA margin (NBFe); as such, the divestiture will have a negative impact the company's EBITDA profile, Tse notes.
Maintain Sector Perform. Target raised to $3 (from $2).