10:55 AM EDT, 04/05/2024 (MT Newswires) -- National Bank on Friday highlighted marketing takeaways from conversations with ADENTRA Inc.'s ( HDIUF ) top leadership at investor meetings in Montreal.

National Bank noted that the discussion focused on the company's acquisition strategy, volume and pricing initiatives, and the company's efforts to drive customer engagement through e-commerce and digital marketing.

The bank noted that M&A is now in focus as an integral part of the company's strategy moving forward.

"Management highlights a robust pipeline which, at typical batting averages, should be more than sufficient to match the company's aspirations of adding $800 million in sales through acquisitions over the next five years as part of its Destination 2028 targets," National noted.

The company expects to spend near $500 million on acquisitions, dividends, and share buybacks (implying near $450 million spent on M&A), and the company could internally fund all this if the timing of transactions is well-spaced, the bank said. In reality, however, deal timing is primarily driven by sellers, meaning the cadence of deals is unknown and could dictate the need for an equity raise, it added.

Separately, National noted management is strongly focused on developing the company's digital presence, driving engagement from customers, vendors, and the workforce.

Among other highlights, National said gross margins are "here to stay", driving higher EBITDA as the top line stabilizes, and noted improving industry sentiment is at odds with ADEN's "attractive" valuation.

"We rate ADENTRA Outperform given the company's strong cash flow generation in all environments, supported by long-term tailwinds in both new builds and the R&R market," the analysts said, adding that National Bank remains comfortable with ADEN as its top pick for 2024 following a "solid" day of marketing meetings with management.

National Bank has a C$51.50 price target on the company's stock.

The company's shares were up 1.3% on last look on Friday in Canada.

Price: 41.47, Change: +0.75, Percent Change: +1.84