SNC-Lavalin shareholders see the light at the end of the tunnel. (Photo: Getty Images)
What to do with the shares of SNC-Lavalin, Cogeco and Intel? Here are some recommendations from analysts that may move prices soon. Note: the author may have a totally different opinion from that expressed.
SNC-Lavalin (SNC, $ 22.26): undervalued
We see the light at the end of the tunnel for the shareholders of the engineering company, believes Mark Neville of Scotiabank.
The company has yet to complete an order book of $ 200 million of fixed-cost projects in the resource sector. The analyst believes that the company will continue to record losses in this division.
On the other hand, Mark Neville believes that the majority of projects were completed in Q4 and the rest of the projects should be completed by the end of Q1 2021. “The way we look at it is that once his projects are finished. completed, SNC-Lavalin will become a fee-based consulting company with three fixed price projects in Canada, ”he commented.
However, this activity is very profitable, but the difficulties of fixed-cost projects mask this reality, he argues. He estimates that SNCL Engineering Services is trading at a multiple of 5 times the book value / earnings before interest, taxes, depreciation and amortization (EBITDA) ratio compared to a multiple of 10 times for comparables.
He admits that one could argue that the remaining fixed-cost projects (non-resource) have a negative value (rather than $ 0 as the analyst believes) and that the investment in Highway 407 in the Toronto area has been structurally depreciated by the pandemic. “We disagree. “
He adds that the SNCL Engineering Services division has shown itself to be resilient and has generated significant cash flow.
Scotiabank reiterates its “outperform” recommendation and its target of $ 38.
Cogeco Communications (CCA, $ 96.00): commercial break