National Bank Raises Target While acknowledging we are "still in early innings," National Bank Financial analyst Zachary Evershed thinks “nation-building initiatives are a major potential growth vector for natural resource and infrastructure exposed names,” like Dexterra Group Inc. for which he sees “substantial opportunity” for its workforce accommodations business.
Last week, he hosted the management team from the Mississauga-based company, including CEO Mark Becker, for institutional investor meetings with discussions focused on new organic growth opportunities brought on by the recent acquisitions of Right Choice Camps & Catering and a 40-per-cent stake in Ohio-based Pleasant Valley Corp. as well as “potential infrastructure and natural resource tailwinds for the remote business in the context of Nation Building.”
“In DXT’s case, projects such as Ksi Lisims LNG, Prince Rupert Gas Transmission, Northern Gateway 2.0, and mining projects yield the potential to create demand for thousands of beds, to the benefit of all workforce accommodations providers, but especially DXT’s Asset-Based Services segment: the acquisition of Right Choice has expanded DXT’s capacity while maintaining its spec/quality advantage vs. competitors,” said Mr. Evershed. “Per our channel checks, executive-style accommodations have become the standard across most sectors, and these beds are typically the first to be contracted. This (and DXT’s ability to rationally relocate assets) is evidenced by its differentiated 90-per-cent-plus utilization rates.
“DXT’s Support Services segment stands to benefit as well, with nation building driving upside to remote hospitality, which currently makes up 45 per cent of consolidated revenues, and defense spending likely providing a tailwind to Dexterra’s exposure to facilities management on military bases and remote government installations.”
After introducing his fiscal 2027 forecast for the company, which fall in line with the long-term growth and margin targets previously set by management, Mr. Evershed raised his Street--high target for its shares to $15 from $14, keeping an “outperform” rating. The average is $12.48.
“With elevated, resilient FCF supported by a variety of tailwinds, DXT remains our top pick for 2025, and as our forecasts do not yet include any contribution from nation building projects, we see significant upside potential to our estimates in outer years,” he added.