RE:A few comments on the RBC "downgrade", tax status etc.A small swat was to be expected, not this sledgehammer. Oh well, the run was fun. Until the next time.
theinvestor22 wrote: 1. RBC upgraded their price target today to $8.50 from the $7.00 target they published on Oct 6th. Thats a 21% target increase in just seven and a half weeks.
2. The change to sector perform was based on the run up in stock price from $5.50 on Oct 5th to $8.36 as of last Friday. That's a 52% price rise, so it becomes obvious why RBC changed from outperform to sector perform.
3. RBC says that, based on Friday's closing price, CRH was trading at a 25% premium to its peers; whereas it should trade at a 10% premium thereto. The three publicly traded peers mentioned in their Oct 6th report as per latest financials are growing on average at 23%; whereas CRH as per Q3 financials is growing at 90%. One could successfully argue that the prior premium of 25% isn't enough based on demonstrated growth and future prospects.
4. Sector perform isn't exactly a death knell, given the superb growth prospects for the sector as a whole (and CRH's superior growth prospects).
5. Based on what happened to the price today, RBC could easily issue an upgrade based on stock price.
A couple of comments on postings related to taxation.
1. Since CRH owns their anesthesia firms through its US subsidiary(ies), any US tax decreases would flow through to CRH.
2. Yes, if big tax breaks do flow to US corporations, acquisitions could become more expensive, but they would also provide greater benefit to CRH, so they would be worth it.
Finally, don't forget the huge payout to GI specialists when monitizing a portion of their anesthesia services. That, plus the fact that they won't have to manage the day to day operations of such services - so they can stick to managing the business of GI health care - should still provide a big incentive for them to sell a portion of the business to professional managers.