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MDF Commerce Inc. (MDF-T) stock shot up more than 20 per cent on Monday after the e-commerce company disclosed a deal with a U.K. retailer Aldi to provide ‘click and collect’ grocery services amid the rise in contactless shopping during the pandemic.

Shares of the Montreal-based company, known until recently as Mediagrif Interactive Technologies Inc., traded as high as $11.50 on Monday, nearing their record $12 reached in mid-October. The stock ended the day up 22.5 per cent or $2.10 to $11.43.

MDF shares are up by about 70 per cent over the past year. The stock was trading as low as $2.22 in mid-March, when markets were hit the hardest by the business closures associated with COVID-19.

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MDF has been refocusing its business on core growth segments including e-commerce and online procurement services for large companies. Most of its sales come from recurring software-as-a-service (SAAS) revenue.

“The market still thinks this is the MediaGrif of the past, but it has transformed significantly under the leadership of new CEO Luc Filiatreault [named in Sept. 2019], and the story is only just starting to get out,” said Stifel GMP analyst Deepak Kaushal, in an email to the Globe.

Mr. Kaushal increased his target price on Monday to $15 from $12 and maintained his “buy” on the stock after the news.

Mr. Kaushal said the company has discussed a large retailer win in the past, but this is the first time it was confirmed as Aldi, Britain’s fifth-largest supermarket with over 900 stores.

In a release, MDF and Aldi said the agreement follows a successful trial of the click and collect service, including online shopping and curbside pickup, in the fall and will be expanded to more than 200 stores across the UK before Christmas.

’'To have been chosen by Aldi U.K. to assist them in the launch of this very successful service is not just an honour, but also a proof of our unique capabilities to support timely and strategic omnichannel commerce initiatives through one comprehensive solution for our clients,” stated MDF e-commerce president Louis Mousseau.

Acumen Capital analyst Nick Corcoran said in a note to clients that the company plans to later roll out the service to all stores in the U.K. and 130 stores in Ireland. He said the contract with Aldi includes a base fee, plus a fee per order fulfilled and that annual revenues are expected to be in the “multi-million dollars per year.” He also said there’s a potential MDF could expand to different countries in the future, noting Aldi has more than 11,000 stores in 19 countries.

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“MDF commerce’s solution was chosen due to it being a headless solution that works with all systems, it can be centralized/localized depending on the needs of individual stores, and it is scalable,” Mr. Corcoran said in a note.

In a note to clients this morning, National Bank analyst Richard Tse called it a “nice win” for MDF.

“We believe the agreement with Aldi group represents is a positive data point in the company’s transition,” wrote Mr. Tse, who has a “sector perform” rating (similar to “hold”) and $10.50 target on the stock.

He said the company is still in the early stages of its transition “and whether MDF commerce can successfully execute its plan while concurrently expanding the margin profile still requires meaningful execution.”

Echelon Capital Markets analyst Amr Ezzat increased his target on the stock to $17 from $15 after the news on Monday.

In a note, he said the agreement “potentially opens the door to Aldi’s significant global network ... not to mention the snowball effect that this endorsement might have in winning other clients.”

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Mr. Ezzat, who has a “buy” recommendation on the name, described MDF as a “high-conviction investment idea as reflected by our off consensus estimates and target price.”

Stephen Takacsy, president and chief investment officer at Montreal-based Lester Asset Management Inc., who owns MDF stock, described the deal as a “significant win for a small Canadian company.”

Added Mr. Takacsy: “It really deserves media coverage. If it was Shopify everyone would be talking about it.”

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