Post by
SunsetGrill on May 04, 2021 9:49am
Scotia Today
Rating Sector Perform
1-Yr. Target C$19.00
AD.UN-T C$17.19
1-Yr. Return 17.7%
Div. (NTM) $1.24 Div. (Curr.) $1.24
Yield (Curr.) 7.2%
Expecting an In-line Quarter with Focus Likely On Deployment and Redemptions Front
OUR TAKE: Neutral.
Alaris is expected to report its Q1/21 earnings results on May 6th. Given that the company had disclosed its expected revenue for the quarter, and with no further developments since then, we are not expecting any major surprises. Alaris has proven the resiliency of its investment portfolio and has demonstrated its ability to deploy capital in attractive opportunities at a record pace. While these factors have likely contributed to a strong share price rally this year, we believe some overhang likely remains on the stock due to a couple of sizeable, pending redemptions that are likely to materialize this year. Redeploying capital from these redemptions without a lengthy lag and continued demonstration of the health of its investment portfolio are likely to help support the next leg up in valuation for the stock, in our view. Maintaining $19.00 target price and our Sector Perform rating. Heading into the print, we have fine-tuned our estimates for the quarter. With only modest estimate revisions, we have kept our target price intact. With some near-term redemptions on the horizon and the potential for some reinvestment risk, we remain on the sidelines for now, and maintain our SP rating. KEY POINTS We are forecasting EBITDA/sh of $0.68, roughly in line with the Street at $0.69, and down 7.5% from last quarter but up 18.4% y/y. That said, actual Normalized EBITDA is expected to be up roughly 4% q/q and over 32% y/y when excluding the impact of dilution from the company's capital-raising initiatives in Q1. In conjunction with its fourthquarter results in March, the company pre-released its expectations for Q1/21 revenue of $32.2M, which is expected to rise just under 1% sequentially, but decline over 5% y/ y. As a result, we do not expect any surprises coming out of first-quarter results on the earnings front, with the only source of variance likely potentially in opex. Heading into the quarter, we expect investor focus to be on: 1) signs of continued resiliency from AD's underlying investment portfolio; 2) update on potential full, or partial, redemptions of Federal Resources (est. ~10.5% of run-rate run-rate guidance) and Kimco (est. ~4% of run-rate guidance) that management had flagged earlier; and 3) update on the deal pipeline after a robust start to the year. The stock is currently trading at 7.9% our NCOA/EV (NTM) Yield, in line with its three year average, but a bit above its average on EV/EBITDA (NTM) basis at 9.1x