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To watch: Alithya, Aya Gold & Silver and FedEX
MATTHIEU HAINS|PUBLISHED YESTERDAY AT 12:14 PM
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To watch: Alithya, Aya Gold & Silver and FedEX
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What to do with the shares of Alithya, Aya Gold & Silver and FedEX? Here are some recommendations from analysts likely to move prices soon. Note: the author may have a completely different opinion than that expressed by analysts.
Alithya (ALYA, $1.78): a promising plan
Alithya recently held its investor day during which management unveiled its strategic plan for the next three years, which mainly aims to increase revenues and profitability margins through organic growth and strategic acquisitions.
Alithya presented a solid business plan, according to analyst Divya S. Goyal of Scotiabank Financial. However, she notes that execution will be the key driver of the company’s long-term success.
For the analyst, increasing scale remains the key to winning larger contracts.
“M&A [can] help address the lack of scale, while expanding the company’s service offerings, which would increase margins and enterprise value. However, M&A alone will not be enough, especially as the M&A environment intensifies across the economy,” says Divya S. Goyal.
Management’s three-year strategic goals include annualized organic growth of 5% to 10%. By increasing the use of its AI and IP solutions and making strategic acquisitions, it is targeting revenue of $150 million.
To do this, the company will aim to improve long-term ROE, targeting adjusted earnings before interest, taxes, depreciation and amortization margins of 11% to 13%.
Continued weakness in IT spending has negatively impacted the company’s latest results and management indicates that this trend could continue in the near term.
Canada remains one of the weakest segments for the company.
Management also believes that continued cloud migration efforts will drive demand for IP solutions related to application migration, intelligent document processing and quality assurance.
The company continues to contain its costs by reducing the use of outsourcers, investing in permanent employees and automating tasks where possible. It has improved its cash position and continues to reduce its balance sheet.
The analyst believes that overall Alithya has a well-formed strategic plan and that the company is on track to achieve its growth objectives. It maintains its “equal to sector performance” rating and its target price of $2.80.