BMO, Canaccord Lower Targets On Xebec Adsorption After Margins Continue To Disappoint

On August 12, Xebec Adsorption Inc. (TSX: XBC) announced its second-quarter financial results. The company announced revenues of $32.7 million, growing 58.4% sequentially. The company had $5 million in gross profit, which grew 19.3% sequentially, and a 15% profit margin. The firm also had a -$6 million operating profit and net income came in at -$7 million. Adjusted EBITDA came in at -$4.6 million.

By the looks of it, almost every analyst lowered their 12-month price target and rating. The 12-month average consensus dropped to $4.86 from $5.51 last month. The company has 14 analysts covering the stock, with 1 having a strong buy rating, 7 have buy ratings and the other 6 have hold ratings. The street high sits at $6.50 from Paradigm Capital while the lowest comes in at $3.25.

BMO Capital Markets was one of the firms that lowered their 12-month price target, which dropped to $4.50 from $5.60. The firm did however reiterate their outperform rating, saying that they are lowering estimates off lower margins.

The company completely missed BMO’s Adjusted EBITDA estimate of $0.9 million while the consensus was $0.7 million. The miss was mostly attributed to lower gross margins, which BMO calls their “Achilles heel.” They say that Xebec’s legacy RNG systems are continuing to drag the companies results down and because of this, “we are taking a more conservative approach relative to management guidance this year.”

Below you can see BMO’s updated estimates on the company, they say that they have lowered them due to this quarter’s margins as well as management’s own EBITDA guidance dropping from 3-4% to -3% to -4%. Although they believe that the order book remains strong which gives the company a strong upside but the company is now in the “show-me” stage.

Canaccord also lowered their 12-month price target to $5 from $6 and reiterated their buy rating on the stock. Although they echo the same sentiment that BMO does, they believe that the 15% drop represents a buying opportunity.


Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

2026 Could Be Gold’s Biggest Year Yet!? | Ryan King – Equinox Gold

Gold Is Screaming Higher While Currencies Burn | Simon Ridgway – Rackla Metals

We Have the Highest-Grade Antimony Deposit in North America!? | Jim Atkinson -Antimony Resources

Recommended

Canadian Copper Secures $8 Million Lead Order From Ocean Partners As Part Of Larger Funding Round

Northern Superior Expands Philibert With 350 Metre Step Out Testing 1.10 g/t Gold Over 25.5 Metres

Related News

Fortuna Silver: Q2 Production Gold Production Comes Up Short On BMO Estimates

Fortuna Silver Mines Inc. (TSX: FVI) yesterday reported its second-quarter production results. The company announced...

Tuesday, July 12, 2022, 12:36:00 PM

GameStop: Consensus Estimates Point To Negative EBITDA For Q3

GameStop (NYSE: GME) will be reporting its third quarter financial results on December 8th after...

Wednesday, December 8, 2021, 10:12:00 AM

Xebec Reveals Recent Major Order Comes From Chevron Joint Venture

Xebec Adsorption (TSX: XBC) this morning announced that it has received the first task orders...

Wednesday, October 6, 2021, 08:34:56 AM

SSR Mining: Canaccord Reiterates $35 Price Target, Buy Rating

Yesterday, SSR Mining (TSX: SSRM) reported its third quarter results. SSR Mining reported revenue of...

Friday, November 13, 2020, 02:32:00 PM

Facebook: BMO Raises Price Target To $425

On July 28, Facebook (NASDAQ: FB) reported their second quarter earnings, continuing the trend of...

Sunday, August 1, 2021, 02:08:00 PM