Q: What is your opinion of ADF Group's new contract? The market likes it obviously. Would this be a good time to add to a starter position? Thanks.
5i Research Answer:
DRX signed a contract with Quebec's infrastructure sector which is potentially valued at just shy $400 million over the contract lifetime and worth $35 to $40 million per year. Given the size of the company, it is a substantial agreement and we like the recurring nature of the deal as well, adding visibility. Shares are up roughly 25% on the news but the shares were trading at a lower valuation to begin with. We might want to give it a day or two to settle in after the jump but think sharpening pencils on the name makes sense with this news.