illumin Holdings Inc T.ILLM

OPEN TO CRITICISMS

[Blitzkrieg]

Acuity Ads Holdings (AT.TO)--3-month target=$5-7, 12-month target=$10-20

PROS

• BAY STREET FINANCED 12% outstanding shares at average cost of US$9, currently trading at US$2.70, discount of 70%

• Company is trading at 6.6x TTM EBITDA→ $200mm market cap less $100 million on balance sheet, average EBITDA of $15-18mm/year

CONS

• Q3 has only 6% q/q growth in revenues, perhaps customers are scaling back marketing budgets and acuity can no longer grow revenues at historical CAGR of 30%

• Market appears to be losing confidence in management’s ability to execute ILLUMIN growth

CATALYSTS

• Company raised $100mm for acquisitions, what if they used it to announce share buyback→ can buy out half of all OUTSTANDING SHARES!

• Perhaps Acuity deferred Q3 revenues to Q4 as a strategy to show growth returning after COVID. Q4/2020 revenues of $35mm, if Acuity does $40-50mm, Acuity will return to 30% annual CAGR.

• Announcing a new acquisition. AD-TECH comps went up HUGE during spring/summer of 2021, now that they have returned to reality, a deal is more likely.

• WORST CASE SCENARIO: let’s say a company that historically grew revenue at 30%, can no longer do that (i.e. recession in 2022), assuming the same free cash flows to equity of $15mm in 2021 for 2022 and beyond, that is a payback period of 6.6 years

[Torontojay]

Very nice. Is this your work?  The only criticism I have regarding analysts price targets is that they're usually wrong and that they rely heavily on relative valuation. The problem with relative valuation is that it says nothing about the true value of a company if the industry as a whole is overvalued. It just says that you're cheaper than the overvalued peer group. I personally

[Blitzkrieg]

Yes my work...my targets are based on q4 revenues of $35-45mm...resulting in annual CAGR of around 30%. I'm buying today at $2.50.