TD Calling it a “strategic provider of comprehensive automation solutions,” TD Cowen analyst Cherilyn Radbourne added ATS Corp. to the firm’s “Canada Best Ideas” list, touting “continued scope for margin expansion and M&A upside.”
“The company leverages its extensive knowledge base/global capabilities to address the sophisticated manufacturing/service needs of multinational customers in attractive markets (life sciences, food & beverage, consumer products, energy, and EVs),” she said. “We believe that the stock is one of only a few direct plays on the long-term trend toward automation.”
“ATS has compounded adj. EBITDA at 25 per cent over the past 5 years, based on high-single-digit organic revenue growth, margin expansion, and strategic M&A. A rapid cooling of the EV boom has dampened ATS’s F2025 earning prospects and is largely responsible for an 30-per-cent year-to-date share-price decline. We anticipate that Q2/F25 (September) will mark a near-term earnings trough, and we expect a return to year-over-year earnings growth by Q4/F25, which is not all that far away. Medium- to long-term, we see ATS as very well positioned to benefit from supply chain derisking, labour cost/availability issues, and automation as an enabler of more sustainable manufacturing operations. We are particularly positive on the company’s focus on end markets with high barriers to entry and lower cyclicality (more than 75 per cent of current backlog).”
Ms. Radbourne has a “buy” rating and $63 target for ATS shares. The average is $57.50.