RCM Technologies ( NASDAQ: RCMT ) rose as much as 21.2% on Monday after B. Riley upgraded the stock to Buy from Neutral after its Q2 earnings report .
The brokerage reiterated its $23 price target on RCMT, which implies potential upside of 69% to last close. The PT represents a conservative 8x multiple on 2022E EV/EBITDA.
"Market share gains, strong end-market tailwinds, and company-specific actions led to significant growth in 2022 with improving prospects for 2023," analyst Alex Rygiel wrote in a note to clients.
B. Riley raised RCMT's adj. EBITDA estimate for 2022 to $30.0M (from $29.6M) and for 2023 to $34M (from $32.3M).
RCMT stock slid after the company reported largely in-line Q2 results, ending 21.31% lower. B. Riley attributed the drop in stock price to short-term retail trading activity.
The brokerage said weaker stock price offered institutional investors an attractive entry point as the shares currently trade at 4.6x 2022 EV/EBITDA, a discount to B. Riley's sum-of-the-parts peer-weighted average of 7.3x.
According to SA Quant, RCMT is a Strong Buy as the stock scored highly in factor grades growth, profitability, momentum and estimate revisions.
Shares of RCMT more than doubled in value YTD and increased nearly fourfold in the last 1 year.
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RCM Technologies rises; B. Riley upgrades after earnings report