NYSEAM:ITP - Post by User
Post by
Aggirl7on Oct 12, 2017 4:49pm
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Post# 26806687
Scotia keeps positive view on ITP
Scotia keeps positive view on ITPExcerpt from analyst's note is below. He maintains his Sector Outperform rating and $26 target.
Value Resin-ating With Us
OUR TAKE: ITP shares have declined meaningfully following Q2 results (and lowered guidance) and trade at bargain prices, in our view. While we estimate C$ appreciation accounts for approximately one-third of the decline, we believe a potential discount related to the impact from higher resin prices has gotten too wide. In summary, we believe higher resin prices will prove to be a manageable and transitory headwind.
While we expect 2017 EBITDA to come in at the lower-end of the guided range, we view the pullback as largely overdone. Despite lowering our estimates (on impact from higher resins), we estimate that at the current share price, the market is ascribing zero value to ITP's organic growth projects and recent acquisitions – in addition to valuing the "base business" at a discount. In our view, a "free" and largely "paid-for" organic and strategic growth pipeline, that once fully ramped should be 40% accretive to the "base business", is an attractive enough proposition to buy the shares (as ITP has with its NCIB) ahead of the quarter-to-quarter variation from higher input costs.