Inside the Market’s roundup of some of today’s key analyst actions
) plan to double its earnings per share over the next five years is “well-constructed” and sees upside potential to its targets for fiscal 2028.before interest, taxes, depreciation and amortization by an annual rate of 12 per cent over the next five years, reaching $10-billion. That exceeds Mr. Landry’s previous estimate of $8.7-billion while falling largely inline with investors’ expectations, according to his recent buyside survey.
The analyst pointed to three potential downside risks to the target: the “aggressive” cost-cutting expectations with “impressive” expected cost savings of $800-million; risks surrounding fuel demand “especially given the economic slowdown occurring” and the “inherent uncertainty” surrounding the timing of M&A activity.
“ATD’s shares trade at approximately 16 times forward earnings, slightly lower than the 5-year average,” he said. “ATD has a better balance sheet than historically with an expected leverage of 2.1 times debt/EBITDA post the closing of the TotalEnergies acquisition, which provides flexibility to make further M&A transactions or return capital to shareholders.”
However, ahead of the start of the third-quarter earnings season, he warned that momentum did not “buoy the OFS activity backdrop, where general uncertainty and structural orientation towards sustainable budgets continued to dominate the cadence of the spending cycle, with the U.S. rig count off 10 per cent through the period .”
“Since the beginning of the year, our bearish stance on the sector has been based on increased competition; a challenging regulatory outlook; higher interest rates; and the combination of the upcoming spectrum auction and the telcos’ leverage being at historical highs,” he said. “We anticipate an improvement in the sector’s fundamentals, with initial signs of competition stabilizing, QBR appearing to take a measured approach to its national expansion and demographic trends remaining strong.
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