Alithya Group (ALYAF, Financial) has witnessed a reduction in its price target from C$3.50 to C$2.50, according to Barrington analyst Vincent Colicchio. Despite this adjustment, the firm maintains its Outperform rating on the company's shares.
The revision comes in response to a contraction in multiples observed after Alithya's recent fiscal Q3 earnings report. Analysts commonly adjust price targets based on changes in company evaluations and market conditions, aiming to reflect a more accurate market value.
This latest move indicates Barrington's continued confidence in Alithya's performance prospects, albeit within a revised financial context.
ALYAF Key Business Developments
Release Date: February 13, 2025
- Revenue: $115.8 million, down 3.9% year-over-year, up 3.8% sequentially.
- Gross Margin: 32.3%, up 100 basis points year-over-year, up 170 basis points sequentially.
- Bookings: $138.4 million, with a book-to-bill ratio of 1.2 times revenue.
- Adjusted EBITDA Margin: 8.9%, up from 7.8% year-over-year.
- Adjusted Net Earnings: $5.7 million, an increase of $1.4 million year-over-year.
- Net Cash from Operating Activities: $11.7 million, a decrease of $3.9 million year-over-year.
- Net Debt: $108 million, with a leverage ratio of 2.6 times net debt to trailing 12-month adjusted EBITDA.
- SG&A Expenses: $28.8 million, a decrease of 2.4% year-over-year.
- Cash and Credit Availability: $63.7 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Alithya Group Inc (ALYAF, Financial) reported strong Q3 bookings of $138.4 million, representing a book-to-bill ratio of 1.2 times revenue.
- The company achieved a record gross margin of 32.3%, up from 31.3% in the previous year.
- The Oracle division exceeded expectations with strong revenue, gross margin, and EBITDA, driven by successful ERP and HCM payroll project implementations.
- Alithya Group Inc (ALYAF) continues to focus on expanding its SmartShore capabilities, with 9.3% of professionals based in SmartShore centers.
- The acquisition of XRM Vision broadens SmartShoring capabilities in Morocco, with identified opportunities for leveraging these new capabilities.
Negative Points
- Consolidated revenues for Q3 were down $4.7 million or 3.9% year-over-year.
- Revenues in Canada decreased by $6.3 million or 9.3% year-over-year, primarily due to a major client's project reaching maturity.
- The US gross margin as a percentage of revenue decreased compared to the same quarter last year due to a decrease in digital adoption subscription revenues.
- Net cash from operating activities decreased by $3.9 million compared to the prior year, primarily due to working capital irrigation.
- The sequential increase in net debt of approximately $12 million reflects the acquisition of XRM and unfavorable FX impact on US dollar-denominated debt.
