IT Tech Packaging Inc T.ITP

TD upgraded ITP this morning

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Intertape Polymer Group Inc. (ITP-T) C$17.20 Revised Guidance for Q4/14; Long-term Outlook Unchanged Event Intertape issued a revised guidance for Q4/14. Impact: SLIGHTLY NEGATIVE  Intertape expects revenue of approximately $201mm (~5% y/y growth) in Q4/14, in line with its previous guidance of 3–6% y/y growth. Our previous estimate for the quarter was $200.1mm, in line with consensus.  The company now expects adjusted EBITDA of ~$20.5mm for Q4/14 versus its previous guidance of $24–$26mm. Our previous adjusted EBITDA estimate for Q4 was $24.2mm, below consensus of $25.9mm.  We believe that the Q4 issues are temporary in nature and should not have a material impact on the company’s results for F2015 or F2016.  We have revised our estimates for F2014 because of the lowered guidance. However, given our view that the operational issues are transitory in nature, our estimates for F2015 and F2016 are unchanged.  Our target price has increased to $25.00 (from $23.00) as we are now using a forecast Canadian dollar/U.S. dollar exchange rate of 1.247 to calculate our target price versus 1.142 previously.  We are upgrading our recommendation to ACTION LIST BUY (from Buy) as we believe that the shares offer a very attractive risk/reward trade-off. TD Investment Conclusion The success of the business in recent years has been driven by organic growth, with management rationalizing costs and focusing on higher-margin products. We believe that the next leg of growth could come from a series of accretive acquisitions. Moreover, with over 80% of sales in the U.S., Intertape offers investors a unique play on the U.S. recovery in the industrial and manufacturing base as well as consumer markets. We believe that the stock is attractively valued at current levels and is supported by a conservatively leveraged balance sheet.