H2O Innovation Ord Shs HEOFF

Canaccord

[retiredcf]

Now the low man on the target totem pole. GLTA

Despite better-than-expected fourth-quarter results, Canaccord Genuity’s Yuri Lynk reduced his target for H2O Innovation Inc.  to $2.75 from $3.25 with a “buy” rating. The average is $3.49.

“The company delivered record quarterly organic growth of 31.7 per cent year-over-year as the pace of water investments accelerates due to the prevailing focus on environmental, social, and governance (ESG) best practices, increased funding in the U.S. via the Infrastructure Investment & Jobs Act, and growing water scarcity,” he said. “However, this growth requires higher levels of working capital, especially to mitigate supply chain issues, which is pressuring the balance sheet somewhat. Additionally, the company is seeing margin pressure in the form of higher labour and input prices such that we now forecast a F2023 EBITDA margin of 10.2 per cent, below management’s 11.0-per-cent to 11.5-per-cent target. All told, HEO remains poised for revenue growth, but bottom-line growth looks set to slow after a 23-per-cent year-over-year increase in Adj. EPS in F2022 on flat margins.”