Savaria Corp. (SIS-T) shares rose Thursday after the accessibility equipment maker reported preliminary third-quarter earnings that beat expectations.
Shares of the Laval, Que.-based company were up 88 cents to $15.50 in early trading. The stock is up about 9 per cent in the past three months and 12 per cent over the past year. The average analyst price target for the next 12 months is $17.28, according to S&P Capital IQ.
Savaria, which makes accessibility equipment such as stairlifts and elevators for home and commercial use as well as, medical beds for the long-term care market, announced after markets closed on Wednesday that it expects revenue for the third quarter to come in at $90-million down 6 per cent from a year ago.
It said adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) is expected to increase 8 per cent to $17-million year-over-year.
The revenue figure is in line with the average analyst expectation but the adjusted EBITDA figure was about 15-per-cent higher, according to Desjardins Securities analyst Frederic Tremblay in a note released this morning.
“This was the second consecutive quarter whereby preliminary adjusted EBITDA was above expectations,” he wrote, while reiterating his $17.50 target and “buy” rating on the stock.
“We view this as a sign of management’s solid execution and the strength of the age-at-home theme amid the COVID-19 pandemic.”
Laurentian Bank Securities analysts Nick Agostino said Savaria continues to benefit from strong demand for products such as residential elevators, which has offset lower demand in the commercial market due to lower foot traffic amid the pandemic.
“In the case of the residential market, we believe SIS is benefiting from customers putting vacation savings (due to travel restrictions) toward home renovations, from a migration of urban dwellers to suburban communities as a result of the pandemic and healthy residential construction activity,” he said in a note released this morning.
Mr. Agostino, who has a “buy” and $17.75 target price on the stock, believes the company’s performance so far this year demonstrates that it’s “well prepared to weather this pandemic through 2020 and into 2021.”
National Bank Financial analyst Zachary Evershed forecasted revenue of $98.7-million for the quarter and adjusted EBITDA of $16.2-million.
“Our EBITDA estimate did not include any contribution from government grants, in keeping with our forecast that revenues would increase,” Mr. Evershed said in a note released late Wednesday. He has an “outperform” rating (similar to “buy”) and a $15.50 target on the stock.
“We believe the lack of disclosure on the contribution from government grants may unsettle some investors,” Mr. Evershed wrote. That said, he doesn’t believe the Canadian Emergency Wage Subsidiary (CEWS) in the third quarter will exceed the $2-million received in the second quarter.
The company said it will release financial results after markets close on Nov. 11.
“I am very satisfied with our results during this challenging time,” chief executive officer Marcel Bourassa said in a release, adding that the company will continue to promote its stay-at-home products for the “many people looking to remain in the comfort of their homes by adding mobility products.”
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