Canaccord Genuity Gives a Buy Rating to Yellow Pages

By Austin Angelo

In a latest note to investors, a research analyst has provided a rating update for the Services sector company, Yellow Pages (TSX: Y). Analyst Aravinda Galappatthige from Canaccord Genuity rated Yellow Pages (TSX: Y) a Buy on today, setting a C$8 price target.

Galappatthige observed:

“Date and time of first dissemination: September 15, 2017, 08:30 ET Date and time of production: September 15, 2017, 08:30 ET Target Price / Valuation Methodology: Yellow Pages Limited – Y Target derived using a DCF-based valuation methodology with a 12% discount rate and a 3x EV/EBITDA terminal multiple. Risks to achieving Target Price / Valuation: Yellow Pages Limited – Y Two primary factors concern us with respect to the outlook of this business. First, Y is likely to face growing competitive pressure on the online front. As businesses move from print to online, the barriers to entry are lowered due to lower capex requirements and lower operating costs (i.e., no printing, paper, distribution, etc.), and it becomes significantly harder to dominate the market. Second, loss of its online audience size is a key risk. The company’s assets currently command up to 9M unique users.”

According to TipRanks.com, Galappatthige is a 1-star analyst with an average return of -0.7% and a 54.8% success rate. Galappatthige covers the Services sector, focusing on stocks such as Shaw Communications Inc, Thomson Reuters Corp, and Corus Entertainment.

Yellow Pages has an analyst consensus of Moderate Buy, with a price target consensus of C$7.50.

Based on Yellow Pages’ latest earnings report for the quarter ending June 30, the company posted quarterly revenue of C$191 million and quarterly net profit of C$820K. In comparison, last year the company earned revenue of C$210 million and had a net profit of C$10.95 million.

Yellow Pages Ltd. engages in the provision of digital advertising and marketing solutions. It operates through Mediative division, which involves in marketing and media services. The company was founded on July 18, 2012 and is headquartered in Montreal, Canada.

The company’s shares closed on Thursday at C$8.