Inside the Market’s roundup of some of today’s key analyst actions
National Bank Financial analyst Richard Tse expects Canadian technology companies to see operating leverage gains during fourth-quarter 2023 earnings season from cost efficiency measures taken through the last fiscal year.
“Given continued uncertainty on the macro backdrop, we believe such operating leverage will be a considerable driver of stock price performance for our group in 2024,” he added.
In a research report released Friday, Mr. Tse predicted Montreal-based point-of-sale and e-commerce software provider Lightspeed Commerce Inc. (LSPD-T) could surprise investors with its results.
“We’re expecting strong FQ3 (CQ4) results from Lightspeed based on our view that Management’s guidance is overly conservative; implying little to no expansion in payment penetration and flat to negative quarter-over-quarter growth in GTV despite solid retail sales data (in the U.S.) in a seasonally stronger quarter,” he said.
Maintaining an “outperform” recommendation for Lightspeed shares, he raised his target to US$25 from US$20. The average target on the Street is $20.10.
Conversely, the analyst named two companies with potential downside risk from its results:
* Altus Group Ltd. (AIF-T) with a “sector perform” rating and $50 (unchanged). The average is $52.06.
“We’re expecting in-line FQ4 results from Altus, albeit with continued headwinds in bookings care of ongoing macro uncertainty (pronounced in CRE industry),” he said. “Per Altus’ Q4′2023 CRE Industry Conditions and Sentiment Survey, firms with more than$5-billion in assets plan to be net sellers in both the U.S. (down 18 per cent) and Canada (down 9 per cent). We believe this has the potential to limit cross-/up-selling opportunities.
“We believe the above coupled with a deceleration in AA [Altus Analytics] revenue growth in FQ3 (up 9 per cent year-over-year vs approximately 20 per cent in H1′23) adds risk to the $400-million AA revenue target this year. For reference, Altus would have to grow AA revenue by 15 per cent year-over-year in FQ4 to achieve that target.”
* Telus International Inc. (TIXT-N, TIXT-T) with a “sector perform” rating and US$10 target. The average is US$11.13.
“We’re expecting soft FQ4 results from TELUS International ... Accenture’s FQ1′24 earnings results saw revenue within the CMT vertical down 11 per cent year-over-year (CC). Given that 68 per cent of TI’s revenue comes from Tech & Games and Communications & Media, we see risk to top-line results in FQ4,” he said.
Mr. Tse also made these target adjustments:
* Nuvei Corp. (NVEI-Q, NVEI-T) to US$30 from US$23 with an “outperform” rating. The average is US$35.54.
“We’re expecting in-line FQ4 results from Nuvei,” he said.
“We see an attractive risk-to-reward profile given a valuation of 8.8 times (EV/EBITDA F24) versus the peer average of 15.4 times. Further, we think Nuvei’s ‘Challenger’ status in the marketplace coupled with its focus on growth markets (e.g., LatAm) where incumbents have dedicated less effort and breadth of service offerings (supports 669 APMs) opens outsized growth opportunities. We’d also note the Company launched its card issuing solution in 30 markets (all in EEA) in Q4 with a rollout to the UK, U.S. and LatAm markets expected to take place in F24; no doubt another potential driver of growth.”
* Shopify Inc. (SHOP-N, SHOP-T) to US$100 from US$80 with an “outperform” rating. The average is US$74.69.
“Tactically, while we see some risk the stock consolidates short term in light of the big move in 2023 and robust valuation, we think new growth segment execution (particularly enterprise, point of sale and B2B) along with growing operating leverage will support the Company’s relative valuation as we move through 2024,” he said.
“What do you do with the stock? We don’t expect the same degree of outperformance in 2024 vs 2023 when it comes to SHOP’s stock price. That said, we continue see a continuation of its growth run-rate from: 1) International; 2) increased take rate with new services; 3) large enterprise (Shopify Plus and CCS); and 4) POS for SMB retail.”
* Thinkific Labs Inc. (THNC-T) to $4 from $3 with an “outperform” rating. The average is $4.05.
“At 1.3 times EV/S [enterprise value to sales] (fiscal 2024 estimates), we think the risk-to-reward profile is favourable, particularly for a Company that’s expected to exit this fiscal year with a positive Adj. EBITDA run-rate,” he said.
=====
Raymond James analysts Frederic Bastien and Steve Hansen thinks Canadian infrastructure and construction companies are poised for “another year of strong performance in 2024,” pointing to changes “to eliminate end-market concentration, reinforce balance sheets and tailor service offerings that answer critical infrastructure needs.”
While they acknowledge valuations have “crept higher,” the analysts think 2024 is setting up as “a stock picker’s market.”
“Despite uncertainty looming in the global macro zeitgeist, our coverage universe delivered a blowout performance in 2023,” they said. “14 stocks outperformed the TSX over the period, with seven producing annual returns in excess of 50 per cent as value investing had its moment in the sun once more. After a stop-and-go 2022, two contractors (BDT, NOA) soared as their unique skill sets, healthy industrial exposures and strategic paths returned investor confidence. Accelerated demand for advanced manufacturing, reliable energy and resilient value chains pushed engineering consultancies higher, with investors chiefly rewarding STN’s water leadership and ATRL’s lowered risk profile. And three largely forgotten stocks (BDI, BDGI and RUS) are forgotten no more after investors figured they’d profit from years of elevated investments in America’s infrastructure. 2023 was not all roses and sunshine for all our stocks, however. The higher-for-longer interest rate environment lured yield-seeking investors away from real assets and one of the highest-quality companies we cover (BIP).”
In a research report released Friday, Mr. Bastien made a pair of rating changes:
* WSP Global Inc. (WSP-T) was upgraded to “strong buy” from “outperform” with a $245 target, rising from $215. The average on the Street is $211.64.
“Our Best Pick for 2024 enters the year packing a one-two punch of growth and profitability,” he said. “On one boxing glove, WSP is capitalizing on strong secular tailwinds and global infrastructure stimulus investments. On the other, it is delivering margin improvements through operational efficiencies and technology. Just as importantly, the engineering consultancy is unrivaled in breadth and scale, which gives it sought-after defensive attributes in a world where geopolitics overshadow many other risks to global growth. What WSP is not, we argue, is expensive. The stock is currently trading at a forward EV/EBITDA multiple of 13.6x, in-line with the average it has maintained post-pandemic and below the 14.8 times Stantec now commands. Based on this, and our expectations management will soon add value through M&A, especially after relatively quiet 2023, we are upgrading WSP to Strong Buy. Our target price moves from $215 to $245 as we roll our valuation out to 2025. Our target multiple stays at 14 times, reflecting the company’s industry-leading operating metrics, track record of execution, proven roll-up model, and enhanced position in the environmental sector.”
* Bird Construction Inc. (BDT-T) was downgraded to “outperform” to “strong buy” with a $18.50 target, up from $18. The average is $18.61.
“It is worth stressing that our downgrade is largely a valuation call, with BDT jumping 142 per cent from when we went all in on the stock in the fall of 2022 (versus a paltry 7 per cent for the TSX index over that period),” he said. “We still believe—largely based on the recent successes in de-risking the business, diversifying the work program and expand self-performing capabilities—that Bird will continue to create shareholder value through 2024.
“Supporting our positive long-term outlook for the firm are the handful of acquisitions it completed since the pandemic turned the world on its head. None were more impactful than Stuart Olson, which came with a strong western Canadian footprint, proven electrical and construction management (CM) capabilities, and a leading maintenance turnaround and sustaining capital services business that was highly complementary to Bird’s early-stage industrial activities. These were taken to a new level last week when BDT tucked-in NorCan Electric, an electrical and instrumentation specialist with a highly strategic oil sands producer as client and $60-70 mln of largely recurring revenue. Since the transaction is expected to add $0.04 to Bird’s bottom-line in 2024, we are increasing our EPS forecast from $1.70 to $1.75, and our target price from $18.00 to $18.50.”
The analysts also revealed their “high conviction ideas” for each sub-group in their coverage universe. They are:
- FirstService Corp. (FSV-Q, FSV-T) with an “outperform” rating and US$205 target, up from US$185. The average is US$169.14.
- WSP Global Inc. (WSP-T) with a “strong buy” rating and $245 target. Average: $211.64.
- RB Global Inc. (RBA-N, RBA-T) with an “outperform” rating and US$78 target. Average: US$73.84.
- North American Construction Group Ltd. (NOA-T) with an “outperform” rating and $40 target. Average: $43.83.
- Black Diamond Group Ltd. (BDI-T) with a “strong buy” rating and $12 target. Average: $10.75.
“FirstService is entering the year fresh off a large acquisition that cements its leadership in property repair, maintenance and restoration, while WSP is riding strong tailwinds and still trading at an attractive valuation,” they said. “Meanwhile, we see RB Global continuing to benefit from robust countercyclical tailwinds on both sides of its business. On the small-cap side, we selected North American Construction Group for its exciting new prospects down under, and Black Diamond Group for its ability to drive consistent rental revenue growth and rapidly scale its digital crew-travel platform (LodgeLink).”
The analysts’ other target adjustments are:
- AtkinsRéalis (ATRL-T, “outperform”) to $55 from $50. Average: $51.17.
- Colliers International Group Inc. (CIGI-Q/CIGI-T, “strong buy”) to US$140 from US$125. Average: US$127.29.
=====
Desjardins Securities analyst Jerome Dubreuil expects the fourth-quarter 2023 earnings season for the Canadian telecom sector to “provide a better sense of the companies’ views regarding how competition might evolve and what their cost-control perspectives are for 2024.”
“We continue to recommend having an equal-weight exposure to the sector given its attractive defensive attributes amid the uncertain macro environment, offset by ongoing elevated competition in the industry,” he added.
In a report released Friday, Mr. Dubreuil named Rogers Communications Inc. (RCI.B-T) his “top pick” ahead of earnings season, raising his target for its shares by $1 to $77 to reflect the impact of lower interest rates and maintaining a “buy” recommendation. The average target on the Street is $75.50.
“RCI has performed very well over the last three months (outperformed the average of BCE and T by 15 per cent) but remains our top pick as the 2025 FCF yield gap vs peers remains too wide, in our view,” he said. “Catalysts that should further close the valuation gap include the fact that 2025 would represent FY2 once RCI reports on February 1 (it looks particularly attractive on 2025 valuation metrics) and continued execution on synergies. We expect 7.0-per-cent organic EBITDA growth at RCI in 2024.”
The analyst’s other target price adjustments are:
* BCE Inc. (BCE-T, “hold”) to $58 from $57.50. The average is $57.30.
“. BCE’s dividend growth decision is likely to be the talk of the town on February 8,” he said. “We believe dividend growth capacity is (1) more important than actual dividend growth; and (2) currently limited for BCE. We expect 2.5-per-cent organic EBITDA growth at BCE in 2024.”
* Quebecor Inc. (QBR.B-T, “buy”) to $42 from $41.50. The average is $39.52.
“Our EBITDA forecast for 4Q23 is lower than consensus following adjustments in our model to better reflect seasonality and intense wireless competition in the quarter. Our longer-term forecast for the company is virtually unchanged,” he said.
* Telus Corp. (T-T, “buy”) to $28 from $27. The average is $26.93.
“We anticipate decent EBITDA growth of 4.9 per cent in 2024 for T, driven in large part by the ambitious cost-control program unveiled last year,” he said. “We also expect its growth target to be almost exclusively driven by organic sources, which was not the case in previous years. We are below the Street on 2024 FCF, so there is slight risk around the results, but T’s growth prospects for 2024 FCF remain solid at 45 per cent year-over-year.”
He maintained a $70 target for Cogeco Communications Inc. (CCA-T) with a “hold” rating. The average is $71.40.
“Following CCA’s quarterly results released on January 10, we moved our recommendation to Hold (from Buy) due to subdued top-line growth in light of the current macroeconomic conditions and competitive pressures,” said Mr. Dubreuil. “Additionally, factors such as higher leverage, a narrowing valuation gap vs peers and the absence of significant short-term catalysts also led us to downgrade the stock. Despite BCE’s deceleration in FTTH deployment, we anticipate that it will continue to gain market share over the next few years to the detriment of CCA, creating additional pressure on CCA’s facilities-based network. Furthermore, we foresee FWA presenting challenges for CCA’s US operations, particularly as capacity issues may not be as imminent given recent spectrum allocations to US FWA service providers (C-band). Finally, we do not anticipate that growth ventures (oxio, wireless, edgeouts) will deliver solid ROI in the medium term.”
=====
Stifel precious metals equity analysts are expecting Canadian gold miners to report sequentially higher production results for the fourth quarter of fiscal 2024, leading to revenue increases alongside the price of gold.
“As we saw with the Q3 earnings season, many miners under our coverage are relying on stronger Q4 to meet FY guidance expectations,” they said. “Of the companies that have pre-reported, all have seen stronger quarter-over-quarter production — with IMG, ELD, DPM and BTO meeting 2023 guidance expectations. We are expecting to see stronger QoQ production from AEM, AAUC, whereas FNV, and K are expected to show sequentially lower production (however, K was well on track to achieve guidance and had an outstanding Q3). In general, we see 2023 proved to be a year of achieving operational expectations except for ABX.
“Overall we are forecasting 2024 gold production to be higher year-over-year; but inflation lingers: for the senior producers we estimate an average production growth of 3 per cent, whereas the intermediate / junior producers in our coverage show an average growth of 10 per cent. We’ve noted previously that margin compression ‘peaked’ in 3Q 2022 and 2023 showed signs of cost stabilizing. That said, inflation is lingering, which some management teams are referring to a mid-single digit impact. Worth noting that oil prices may slightly benefit costs (in 2023 most gold miners had assumed $90/bbl WTI and we believe miners will continue to be prudent on assumptions when setting 2024 cost guidance expectations in their budgets).”
In a research report released Friday, analyst Ingrid Rico downgraded Eldorado Gold Corp. (ELD-T) to “hold” from “buy” with a $17.25 target, up from $15.50. The average on the Street is $18.89.
“The company is nearing inflection points across its portfolio,” she said. “The large mineral potential at Lamaque is just starting to become clear to the market with the recent 2022 PEA highlighting the potential for an extended LOM from the Lower Triangle and Ormaque resource base. Kişladağ restarted operations in 2019 after a brief period of suspension, with gold production beginning to hit steady state, with the successful commissioning of the high-pressure grinding roll circuit (HPGR) and recovery rates performing to plan. At Olympias, optimization efforts are targeting an operational turnaround for that long-life operation. With the de-risking milestones of project financing and board approval now in hand, Skouries serves as a material growth driver to ELD, with average LOM annual production of 140koz Au and 67Mlbs copper (or ~280-300koz AuEq) over a 20-year mine life. Expect ELD to continue de-risking Skouries through project construction execution.”
Conversely, analyst Stephen Soock upgraded Moneta Gold Inc. (ME-T) to “stong buy” from “buy” with a $3 target, down from $5.75 and below the $3.96 average.
“We see Moneta’s Tower project as one of the next major gold deposits in North America to be developed,” he said. “The September 2022 PEA showed a project producing more than 250koz/yr for more than a decade from a combination of high grade underground and bulk tonnage open pit sources with a manageable initial capex bill of less than $500-million. However, the deposits lend themselves to a variety of different production scenarios and the project could be scaled up or down easily. Tower is located just 60 minutes east of Timmins, ON along a regional highway with excellent access to infrastructure in Canada’s premier mining district. While we have no knowledge of any M&A discussion or activity, we believe the combination of all these factors make it a very attractive takeout candidate for major gold producers. The company acquired Nighthawk Gold and added PEA level Colomac asset to its portfolio. Both Tower and Colomac are two large capex projects, and we see increased funding risk for the company to develop these projects. We believe the new CEO may pivot on the development approach at Tower, looking at a smaller scale, higher margin project with a reduced capex requirement utilizing excess nearby mill capacity. We are being cautiously optimistic on the stock due to the lack of clarity on path forward or priority for the two projects.”
The firm also made a series of target price adjustments on Friday. For senior and intermediate producers, their changes are:
- Agnico Eagle Mines Ltd. (AEM-T, “buy”) to $94 from $91. Average: $89.94.
- Barrick Gold Corp. (ABX-T, “buy”) to $25 from $30. Average: $29.82.
- B2Gold Corp. (BTO-T, “buy”) to $6.50 from $7. Average: $6.31.
- Iamgold Corp. (IMG-T, “hold”) to $3 from $3.50. Average: $4.33.
=====
While acknowledging Tidewater Renewables Ltd.’s (LCFS-T) “depth of value remains intact,” National Bank Financial analyst Dan Payne downgraded its shares to “sector perform” from “outperform” on Friday until he gains “visibility” on its outlook following its recent management changes.
“The company recently announced a transition within its management ranks, with Jeremy Baines replacing Rob Cocleugh in the position of CEO, while Mr. Cocleugh and Simon Bregazzi have also departed the board of directors,” he said. “These changes come in concert with a similar transition within the ranks of its parent company, Tidewater Midstream, and are intended to reflect a more operational focus within the executive ranks of each business, and while surprising, the business continues to evolve through the various stages of execution and rationalization of core projects in alignment with key shareholders.
“From the perspective of LCFS, management remains focused on execution of its key initiatives, in the continued optimization of its recently commissioned HDRD [hydrogenation-derived renewable diesel] facility in support of cash generation, debt repayment, deleveraging, and ultimately, shareholder value. To that end, recent channel checks suggest that optimization of the HDRD facility continues to progress towards validating its nameplate capacity at 3,000 barrels per day.”
Mr. Payne thinks the management turnover “injects near-term uncertainty” into the Calgary-based company. He also emphasized the impact of delays to the start-up the HDRD complex in Prince George, B.C., including “largely expected disruptions through its initial commissioning.”
“Given costs of feedstock (towards a higher nameplate) and associated hedging losses, we expect its contribution to EBITDA for the period to be relatively minimal,” he added. “With that, we modestly revised our Q4/23 forecasts to align with the low end of its previously stated guidance range. Similarly, and as we look forward through its continued optimization, in association with a timely review of the outlook by new management (more detailed guidance expected by year-end results), we are revising our 2024 estimates modestly to reflect a risked utilization at its HDRD facility (i.e., 80 per cent of its stated $90-110 million run rate), and which is approximately 10 per cent below prevailing street consensus. Optimistically, capital requirements for the business should be relatively minimal for the year, which should maximize its free cash and deleverage capabilities.”
With the cuts to his forecast, the analyst lowered his target for Tidewater shares to $12 from $16.50. The average on the Street is $14.08.
“Channel checks around optimization of its HDRD facility and associated EBITDA continue to progress, which should continue to positively underpin the long-term value proposition,” said Mr. Payne.
Elsewhere, Acumen Capital’s Trevor Reynolds cut his target to $13.50 from $16 with a “speculative buy” rating.
=====
National Bank analyst Jaeme Gloyn once again named Fairfax Financial Holdings Ltd. (FFH-T) his top pick for 2024 in his Diversified Financials coverage universe.
The Toronto-based holding company was also selected a year ago and saw its shares jump 52 per cent in 2023 (versus a gain of 9 per cent for the S&P/TSX Capped Financial Index).
“Last year, our Top Picks focused on companies with de-risked growth profiles as macroeconomic risks and uncertainty prevailed,” he said. “While ‘lower interest rates’ and ‘soft landing’ are the bullish buzz words today, we believe uncertainty remains elevated in 2024. We see a Canadian consumer with meaningful signs of strain: retail sales are softening, employment is weakening, credit card balances are rising, and net savings are deteriorating – all of which are leading to rising delinquencies and insolvencies. The U.S. consumer shows similar trends. Moreover, elevated probability of recession (and uncertainty as to its depth and length) could strip away the benefit of lower rates.
“Therefore, our preference to start the year focuses on companies that we expect will deliver solid operating results and valuation upside regardless of whether interest rates move lower or a soft landing materializes. Based on these criteria, Fairfax Financial (FFH) is our Top Pick for 2024.”
In a report released Friday, Mr. Gloyn said he picked Fairfax based on three potential catalysts:
1. Operating Income guidance upgrade.
“In the first three quarters of 2023, Fairfax hit their annual operating income expectation of $3.0-billion,” he said. “We expect management will raise the bar on this outlook to upwards of $5-billion.”
2. Valuation.
“We believe consistent low to mid-teens operating ROE [return on equity] performance will drive a re-rating of the shares,” he said. “At the current trading valuation of 1.05 times, the market is pricing FFH like a 7-per-cent ROE business. We expect interest and dividend income ALONE to drive 7-percentage-points of ROE. FFH peers such as MKL and BRKa also trade at higher valuations of 1.4 times to 1.5 times P/ B.”
3. S&P/TSX 60 Index inclusion:
“FFH is top candidate for inclusion in the S&P/TSX 60 Index, which could drive estimated demand equivalent to 6 days of FFH average daily volume,” he said. “This will turn an under-owned financial into a core holding.”
Mr. Gloyn also sees the property and casualty (P&C) insurance sector remaining “well-positioned for 2024, regardless of a soft landing or changes in interest rates.”
“What if interest rates move lower? Lower rates could be neutral/positive for FH,” he said. “First, Fairfax’s extended duration of fixed income assets protects them from a near-term decline in rates. Second, Fairfax has the ability to purchase higher yield corporate debt. Third, lower rates drive gains in fixed income assets, flowing to net income, ROE and book value growth.
“What if the insurance cycle softens? We don’t see a softer insurance market as a significant concern because; i) Fairfax has proven its ability to deliver mid-90s combined ratios in soft market conditions, ii) Fairfax has the ability to release recently built up excess capital at subsidiaries, iii) underwriting income represents 20 per cent of our operating income forecast in 2024/2025.”
Maintaining an “outperform” rating for Fairfax shares, he hiked his target to a Street-high $2,000 from $1,800. The current average is $1,648.87.
=====
In other analyst actions:
* Veritas Research’s Desmond Lau cut Telus Corp. (T-T) to “reduce” from “buy” with a $27 target. The average is $26.93.
* BMO’s Stephen MacLeod raised his Aritzia Inc. (ATZ-T) target to $38, exceeding the $35.22 average, from $32 with a “market perform” rating.
“We hosted Aritzia management for a series of investor meetings and a tour of Aritzia’s new GTA DC,” he said. “We remain constructive on Aritzia’s long-term U.S. growth opportunity, leveraging the key success factors that have underpinned its popularity in Canada. Boutique performance remains solid, but e-commerce has faced headwinds from copycats, product newness, and digital noise; challenges Aritzia has taken steps to confront. Given the 26-per-cent year-to-date move in the stock we see balanced risk-reward, but all else equal could become more constructive on a pullback in the stock.”
* After analyzing the potential of its Clarios subsidiary, Desjardins Securities’ Gary Ho raised his Brookfield Business Partners L.P. (BBU-N, BBU.UN-T) target to US$31 from US$29 with a “buy” rating.
“Given deleveraging efforts, we believe Clarios is primed for an IPO as early as 2H24,” he said “At US$13.50, Clarios represents 63 per cent of BBU’s stock price today (rest of BBU trades at a 69-per-cent discount to management’s US$39+ NAV) while accounting for only 25 per cent of its run-rate EBITDA. At 11.5 times our FY25 EBITDA, Clarios’ valuation alone eclipses BBU stock price today. Six months prior to BBU’s last two monetization events, BBU stock gained 37–50 per cent.”
* Scotia’s Himanshu Gupta raised his Chartwell Retirement Residences (CSH.UN-T) target to $14, matching the average, from $12.50 with a “sector outperform” rating.
* BMO’s Étienne Ricard increased his target for Goeasy Ltd. (GSY-T) to $187 from $177 with an “outperform” rating. The average is $178.89
“Near-term investor focus is threefold: i) introduction of 2026 forecasts in February; ii) credit resiliency amid continued cost-of-living pressures; and iii) timeline on regulatory changes,” Mr. Ricard said. “While valuation has normalized to long-term averages, GSY remains one of our preferred ideas. We see two key sources of earnings upside, namely potential for stronger receivables growth amid reduced competitive intensity and margin upside with GSY ‘experiencing peak benefits of operating leverage.’”
* CIBC’s John Zamparo raised his Guru Organic Energy Corp. (GURU-T) target to $3 from $2.75, keeping a “neutral” rating. The average is $4.08.
“Our concerns for the stock remain unchanged, which is that profitability does not seem likely through F2025, while a lack of liquidity deters many investors. An acceleration of growth could offset this, but we forecast only a modest improvement of the low-double-digit pace seen of late. This reflects ongoing product innovation and sharper growth in the untracked club and e-commerce channels, which is offsetting lower growth in the convenience & gas and grocery segments,” Mr. Zamparo said.
* ATB Capital Markets’ Tim Monachello hiked his Mattr Corp. (MATR-T) target to $25.50, exceeding the $22.31 average, from $21 with an “outperform” rating.
“We assess the value creation potential of MATR’s long-term targets to organically double revenue by 2030 from 2023 levels, suggesting revenue will grow more than 10 per cent per year to over $1.8-billion by 2030,” said Mr. Monachello. “Importantly, this organic growth is expected to be achievable with less than $50-million per year of capex over the 2025-2030 time frame—representing a 2.5-3.5 times revenue return on capex, while delivering more than 70-per-cent FCF conversion rates. Respecting operational and execution related risk to MATR’s long-term organic growth trajectory, we assume much more conservative long-term estimates in our DCF valuation, with revenue only reaching roughly $1.3-billion by 2030. Still, we believe that MATR has a well laid out plan to grow revenue in each of its primary business lines, which will be largely enabled by the capacity additions and efficiency improvements investments in 2024 and 2025. As such, we anticipate a significant acceleration in revenue growth and expansion of EBITDA margins beginning in 2025 and gaining momentum in 2026 (as contemplated in our newly minted 2026 estimates).”