On Monday (NASDAQ:MNDY), BMO (TSX:BMO) Capital Markets adjusted its outlook on shares of ECN Capital Corp . (TSX:ECN:CN) (OTC: ECNCF), increasing the price target to C$3.25 from the previous C$2.35. The firm also maintained a Market Perform rating on the stock. The revision follows ECN Capital's third-quarter earnings report and the release of its 2025 guidance.
ECN Capital reported third-quarter operating earnings per share (EPS) of US$0.05, which was in line with expectations. The company also provided guidance for 2025, projecting a basic EPS range of US$0.19 to US$0.25. This forecast is slightly higher than BMO's estimate of US$0.19 on a fully diluted (fd) basis and the consensus estimate of US$0.18.
The analyst at BMO Capital attributed the difference in guidance primarily to cost-cutting measures. ECN Capital is consolidating all head office corporate functions with Triad as part of a corporate simplification plan.
Due to anticipated improvements in Triad's margins, a rebound in originations, and the effects of corporate simplification, BMO has raised its 2025 fully diluted operating EPS estimate from US$0.19 to US$0.21. This figure aligns with the midpoint of ECN's basic EPS guidance.
Despite the positive adjustments, the analyst noted a cautious stance, referring to the company as a "show-me story." This caution stems from ECN Capital's history of lowering guidance and the observation that 2024 originations are on track to fall short of the recently reduced 2024 guidance.
The new price target implies a valuation of 11 times the estimated earnings for 2025, up from the previous valuation of 9 times.
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