Ag Growth International: Price Target Cut to $57 at ATB Capital

Ag Growth International Inc. (TSX: AFN) shares fell sharply on Monday after the company announced a downward revision to its 2024 financial guidance, prompting ATB Capital Markets to lower its price target for the stock. The company now expects Adjusted EBITDA of approximately $260 million with Adjusted EBITDA margins of around 18.5% for the full year 2024, compared to its previous guidance of $280 million and 19.0%, respectively.

The downward revision in guidance was driven by two primary factors: softness in the North American farm market and engineering and procurement delays on certain Commercial segment projects in Brazil. These challenges have led to a noticeable slowdown in early order program activity and pushed some financial contributions expected in 2024 into early 2025.

ATB Capital Markets analyst, John McNally, reduced his price target for Ag Growth International shares to $57 from $65, citing the company's revised guidance and the ongoing challenges in the farm market. McNally maintained a "Hold" rating on the stock, reflecting his cautious outlook on the company's near-term prospects.

Ag Growth International's shares traded 15% lower at CAD 40.21 (USD 27.86) on Monday, reflecting investor concerns about the company's revised guidance and the broader challenges in the farm market. The company is scheduled to release its fourth-quarter and full-year 2024 results on March 5, 2025, at which time investors will have a better understanding of the company's performance and outlook.

In conclusion, the downward revision in Ag Growth International's 2024 guidance, driven by softness in the North American farm market and engineering and procurement delays in Brazil, has led ATB Capital Markets to lower its price target for the stock to $57. Investors will closely monitor the company's performance and outlook as it releases its fourth-quarter and full-year 2024 results in March.