Great looking numbers. Just initiated a position out the gate this morning. GLTA
After Evertz Technologies Ltd. reported “blowout” fourth-quarter results that featured a “big” beat, Canaccord Genuity analyst Robert Young said a “massive” backlog suggests “strong” upside for the manufacturer of digital broadcast and film products.
On Wednesday after the bell, the Burlington, Ont.-based company reported revenue of $128.9-million, up 11 per cent and “significantly” above both Mr. Young’s $110.3-million estimate and the consensus forecast of $110.9-million “driven by strength in North America and deployments across hardware and cloud along with services and licenses.” Adjusted earnings per share of 24 cents topped the 17-cent projection of both the analyst and Street.
“Evertz also reported a massive backlog of $392-million in FQ4, a record by a wide margin, and driven by two large deals including a $25-million international order and a $152-million Cloud and ProServ order received in April,” said Mr. Young. “Adjusting for these two large orders, backlog was still strong at $215-million, up 22 per cent year-over-year. Evertz sees 50 per cent of the backlog being realized in F24, which supports our raised forward estimates. Management noted that demand for all its products and solutions remains strong, with Cloud a key driver, and believes the company is well positioned despite recent announcement from competitors signaling further investment in Cloud. Evertz did not provide any update on Haivision, although we believe it continues to retain $8-million of its shares based on notes to financialstatements. We see potential for margins to expand slowly, although management reiterated its long-held 56-60-per-cent target range.”
Raising his revenue forecast to account for the “impressive bump” in backlog, the analyst hiked his target for Evertz shares to $19 from $15, reaffirming a “buy” recommendation. The average is $16.67.
“Evertz currently trades at 7.2 times EV/calendar 2024 estimated EBITDA based on our increased estimates,” he said. “Video peers trade at 9.5 times whereas IP peers trade at 9.0 times. While Evertz shares are less liquid, we believe our 12 times EV/NTM [next 12-month] valuation multiple is a reflection of the massive FQ4 beat, record backlog and a growing cloud and services contribution, which could be in the 20-per-cent-plus range as a percentage of revenue. As of last close, Evertz’s dividend yield is 6.6 per cent.”
Elsewhere, BMO’s Thanos Moschopoulos raised his target to $15.50 from $15 with an “outperform” rating.