logo
  Join        Login             Stock Quote

Morneau Shepell PT Lifted To $13 By CIBC After Q1, 'Sector Performer' Retained

 May 16, 2012 02:56 PM


CIBC World Markets Inc. increased its price target on shares of Morneau Shepell Inc. (TSE:MSI) to $13 from $12.50, while retaining its "Sector Performer" rating.

After the company's first quarter results, the brokerage lowered its 2012 EPS estimate to $0.56 from $0.60 while raising its 2013 estimate to $0.73 from $0.67.

MSI reported solid Q1 results. Revenue increased 22% to $104 million, versus $96 million consensus estimate, and adjusted EBITDA was up 24% to $19.3 million or $0.40/share versus $18.1 million consensus estimate.

Organic growth in Q1 was impressive (17.5%). Normalized free cash flow was up 26% year-over-year ($13.2 million). CIBC estimates a payout ratio of 71%.

In Q1 MSI completed the acquisition of SBC Systems, a leading provider of employee benefits administration systems in the U.S., for $5.5 million. Management noted the addition of SBC helped win several large U.S. clients in the quarter, including City of Chicago and PF Chang's.

[Related -Xerox Corp. (XRX): An Insider’s $500,000 Insider Buy]

MSI issued $75 million in convertible debentures in Q1, which was used to pay down its revolver, with the debt-EBITDA ratio on its revolver down to 2.0 times versus 2.9 times at the end of Q4 (covenants at 3.25 times). The brokerage believes excess free cash flow will be used to pay down debt and potentially for accretive acquisitions.

The brokerage continues to believe that MSI is well positioned for growth given trends in pension benefits outsourcing, and opportunities in the health management vertical and the U.S. market. CIBC retained its rating but increased the price target to reflect recent results.

[Related -Qihoo 360 Technology Co Ltd. (QIHU) Q2 Earnings Preview: A Green Monday]

Morneau Shepell, formerly Morneau Sobeco Income Fund, provides human resource consulting and outsourcing services. Its solutions are designed to assist employers in managing the financial security, health and productivity of their employees.

MSI is trading up 0.95% at $11.70 on Wednesday.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageMBIA Inc. (MBI) : BTI's $12 a Tough Task

MBIA Inc. (NYSE:MBI) is doing well on a day stocks are struggling The guarantee insurance company is the read on...

article imageUrban Outfitters, Inc. (URBN) Q2 Earnings Preview: A Snug Fit

Urban Outfitters, Inc. (NASDAQ:URBN) will hold a webcast to discuss its second quarter of fiscal-year 2015 read on...

article imageEstee Lauder Companies Inc. (EL) Q4 Earnings Preview: Options Player Betting On EL’s EPS Looking Pretty

Estee Lauder Companies Inc. (NYSE:EL) will release fiscal 2014 fourth quarter and full year financial read on...

article imageHerbalife Ltd. (HLF): 3 Reasons To Pay Attention to Recent Insider Buying

Well, well, well… it looks as if boardroom buyers viewed the recent selloff as an opportunity to buy. read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.