Q: Hello, Raymond James dropped the price target of ATS to $61 from $67 ( Still a BUY ), in a preview of the quarter, yesterday. Not sure if other analysts on the street will trim estimates/target, leading to Nov 8 release of results. Is this a hint of what could be in the store ? Stock has been weak over past several weeks, perhaps, in anticipation of a soft quarter. What's your take ? Thank You
5i Research Answer:
We really try not to second-guess quarterly results. Not only does one need to be 'right' on the quarter, but also right on the forecast and also right on the market reaction, which is often different than one might expect. ATS has been weak along with many mid-cap growth stocks. Its decline was not unique the past two months. Of the seven analysts on the stock, four are current and three had updates in September only. ATS beats estimates about 70% of the time, and the average (absolute) move on earnings is 6.27%, ranging from +17% to -11% moves in the stock over the past decade. With its large backlog we are not particularly concerned here.