RE:TD's reportbmbruce wrote: states that their target price drop from 11.50 to 10.50 is relates to..
"On a separate note, we are reducing our target price to reflect the low likelihood of a quick reversal of CRH's recalibrated valuation multiples"
any comments on this?
the valuation multiple is 11.5X EV/EBITDA (2017 Earnings Estimates) which was selected based on averages from CRH's Peer Group, which aren't really even appropriate for a pureplay anesthesia provider (TD even notes that the peer group are largely, multi specialty companies with exposure to more complex challenges of the hospital industry).
the stock was trading at a premium multiple a few months back (ie. when the share price was ~$12) so they are lowering their target price as the stock is no longer attracting that "premium" valuation multiple and they don't think it will retrace to that premium multiple level very quickly.