On Thursday, BMO Capital Markets adjusted its outlook on Evertz Technology (ET:CN) (OTC: EVTZF), a provider of broadcast equipment and solutions, by reducing the price target from Cdn$17.00 to Cdn$15.00, while maintaining an Outperform rating on the stock.
The revision followed the company's first-quarter results for fiscal year 2025, which fell short of market expectations in terms of revenue and EBITDA. The analyst noted that Evertz experienced softer shipments in August, contributing to the weaker quarterly performance. Despite the lower-than-anticipated results, the firm's software and services revenue showed a significant increase, contrasting with the underperformance in hardware sales.
The price target adjustment comes as BMO Capital anticipates a more pronounced impact on Evertz's total revenue growth due to the ongoing transition to software and cloud-based services. The firm has accordingly adjusted its revenue estimates for Evertz.
Despite the challenges faced in the near term, BMO Capital remains optimistic about Evertz Technology's prospects.
The analyst highlighted several factors supporting the positive outlook, including the company's consistent dividend payments, strong cash generation capabilities, reasonable valuation, and an improving mix of revenue sources. However, expectations for revenue and EBITDA growth are tempered for the immediate future.
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