BNS Scotia Capital’s George Doumet lowered his Park Lawn Corp. target by $1 to $42, which is below the $44.44 average. He maintained a “sector outperform” recommendation.
“We are introducing our FY2023 estimates, while tapering our 2H/21 and 1H/22 organic growth assumptions to reflect a more pronounced normalization of at-need volumes than previously expected,” he said. “We continue to look for healthy organic growth over our forecast horizon driven by growth in revenue per call, higher preneed volumes, and incremental volumes resulting from recent investments in capacity, notably Westminster, which is expected to come online in 2H/22. That said, we are seeing evidence of softer than expected death rates in the US, and more so in PLC’s key geographies (more on this below). As such, we have taken a conservative approach and assumed this trend is to continue (despite the ongoing surge in delta variant cases) over the next few quarters. Our 2021 and 2022 adj. EBITDA estimates are reduced by 7 per cent. Fresh off the heals of the company’s equity raise, we look more carefully at what it means for upside to our estimates once deployed. We estimate upside of 25-per-cent-plus to our adj. EBITDA estimates as the company continues to execute on its funnel of acquisitions.”