KITS Eyecare gains on strong fourth-quarter earnings

Shares of Canadian small-cap KITS Eyecare, which makes and retails eyewear and contact lenses, climbed nearly 5% on the Toronto Stock Exchange on Monday, January 20. The driver was a reported 42% higher top line in the fourth quarter, combined with a record adjusted EBITDA margin.

Details

On Monday, KITS Eyecare shares rose 4.6% on the Toronto Stock Exchange to CAD8.26 apiece.

The company released preliminary fourth-quarter and full-year 2024 earnings earlier in the day. Revenue surged 42% in the fourth quarter to CAD44.8 million, while the adjusted EBITDA margin reached a record 6%, translating into just under CAD2.7 million of EBITDA. For comparison, a year earlier, adjusted EBITDA stood at just CAD0.9 million.

The full-year top line was up nearly 30% at approximately CAD159.3 million. The adjusted EBITDA margin exceeded 4%, compared to a negative result in 2023.

KITS Eyecare plans to release audited results in early March.

About the company

KITS Eyecare was founded in 2018 by Canadian entrepreneur Roger Hardy and his partners, Joseph Thompson and Sabrina Liak. The business began with making corrective lenses to establish a customer base before expanding to eyewear. Today, KITS Eyecare describes itself as a “digital eyecare platform,” offering online vision tests, eyewear, and contact lenses. Most orders are made the same day and delivered across Canada the next day. The company’s lab can produce over 4,000 pairs of glasses daily.

Analyst insights

According to data from Investing.com, seven coverage analysts rate KITS shares as a “buy,” with no “sell” recommendations. Their average target price is CAD15.50 per share, representing upside of nearly 88% versus current levels.

Over the last 12 months, KITS shares have gained 30%. The stock surged in mid-2024, peaking at CAD11.50 per share on August 19 before giving back some of those gains.

In early September, KITS announced a secondary offering of one million shares at CAD10.15 each, sold by entities linked to the company’s founders — Hardy, Thompson, and LD Group. Shortly after, the underwriters, Canaccord Genuity Corp and Beacon Securities Limited, exercised their overallotment options. Following the placement, Hardy retained a 28.5% stake, LD Group 33.2%, and Thompson 0.6%. The day after the secondary offering was announced, KITS shares plunged nearly 12%.