Analyst Coverage... Canaccord Genuity’s Matthew Lee increased his Black Diamond Group Ltd. target to $8.50 from $8 with a “buy” rating, while Acumen Capital’s Trevor Reynolds raised his target to $9.75 from $8.50 with a “buy” rating. The average is $8.67.
“Black Diamond Group reported Q4/22 results [Thursday] with revenue and EBITDA both beating forecasts,” said Mr. Lee. “Our key takeaway from the quarter was the potency of BDI’s rate increases, which continue to flow through as the firm renews contracts.
We believe there is more room for rate expansion in F23 given that only a third of contracts renew each year and market rates continue to climb. By backing out the acquired Ontario assets, we believe that BDI’s core MSS business delivered a rental rate of over $800 per month, which was far above our expectation and reflects the continued demand for modular solutions across North America.
Additionally, we were impressed by the surging demand in WFS across various end markets, which drove the utilization rate to 62 per cent (Q4/21: 49 per cent). We expect the utilization rate will continue to improve in F23 with new projects coming online even as large-scale projects end. We have increased our rental rate and margin estimates, leading to a target price increase.”