To watch: GDI Building Services, Wesdome and Laurentian Bank

National Bank Financial’s Gabriel Dechaine lowered his recommendation on Laurentian Bank shares to “underperform.” (Photo: 123RF)

What to do with GDI Building Services, Wesdome and Laurentian Bank securities? Here are some analyst recommendations that are likely to change prices soon. Note: the author may have a completely different opinion than the one expressed.

GDI Building Services (GDI, $40.74): expansion in the United States

Quebec-based GDI Building Services is acquiring the U.S. operations of France-based La Financière Atalian for an undisclosed sum.

The transaction is expected to be completed on October 31.

Analyst Frederic Tremblay of Desjardins Securities views the acquisition favorably and believes it will allow GDI, which offers integrated commercial building maintenance services, to expand its US footprint in New York, Ohio and Missouri.

“The transaction will enable GDI to increase its annual revenue by approximately C$100 million,” he said, noting that Atalian USA has 2,500 employees.

“Looking at the financial statements of La Financière Atalian, we can see that the performance of the US division has been mixed in recent years, with hopes for improvement in 2023 and beyond,” explains the analyst. He believes the US division’s profit margin is between 1% and 3% (low single digits), adding that GDI will be able to accelerate improvements in its profitability thanks to increased operational efficiency.

“We believe Atalian USA’s profitability could match that of GDI’s US division in the fourth quarter of fiscal 2024, which is 7%-8%. Our analysis is based on the fact that GDI, as the acquirer, proved that Atalian USA already has a presence in the United States and that Atalian USA is the equivalent of Ainsworth’s acquisition maintenance services (provider of mechanical systems and equipment repair and maintenance services) to which it happened in 2015 and turned into a success story,” explains Frederic. Tremblay.

He estimates that the price paid for Atalian USA is between 15 and 25 million dollars.

The analyst maintains his Buy recommendation on GDI shares and slightly raises his one-year price target from $55 to $56. He points out that GDI shares are currently trading at a multiple of 8.6 times forecast 2024 earnings before interest, taxes, depreciation and amortization (EBITDA), on the low end of 8 to 12 times over the past five years. Its annual target price is based on a multiple of 10 times next year’s forecast EBITDA.

Wesdome (WDO, $7.57): Production on track, work continues at Kiena mine

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