Analysts Adjust -G&M A group of analysts on the Street trimmed their targets for shares of Superior Plus Corp. (
) after its 2022 guidance fell below forecasts.
On Friday, the Toronto-based utility dropped over 13 per cent after releasing an adjusted EBITDA target of $410-$450-million for the year, missing the consensus estimate by almost 7 per cent.
“SPB’s Q4/21 results were in line, but 2022 guidance came in below expectations, largely due to increasing costs and the delay of Kamps beyond a Q1/22 closing,” said IA Capital Markets analyst Matthew Weekes. “While we estimate that 2022 results will be closer to the high end of guidance, we are maintaining our Hold rating as we await factors that could spur more positive momentum in SPB’s business. These include the closing of Kamps, recovery of commercial volumes in Canada, execution of cost savings and organic growth initiatives, and synergies from acquisitions, in turn driving higher cash flows and allowing SPB to grow into its expanding leverage.”
Mr. Weekes cut his target for Superior Plus to $14 from $15.50, keeping a “hold” rating. The average is currently $14.83.
Others making changes include:
* National Bank’s Patrick Kenny to $13 from $15 with an “outperform” recommendation.
“With guidance falling short of expectations, the stock has been sent to the proverbial penalty box until the company can prove that its over $600-million worth of tuck-in acquisitions announced/completed in 2021 are in fact delivering returns in line with an average synergized EBITDA multiple of 7.0-7.5 times,” said Mr. Kenny. “Although tuck-ins are absorbed into the broader Canadian & U.S. segments, we will be looking for improved disclosures/granularity going forward as well as steady performance from ‘same-store-sales’ operations, as proof the ‘Superior Way Forward’ program including another $1.3-billion of tuck-ins planned through 2026 is poised to add shareholder value.”
* RBC’s Nelson Ng to $15 from $16 with a “sector perform” rating.
“We believe the shares of SPB sold off due to a combination of elevated leverage, an equity overhang, weaker-than-expected 2022 EBITDA guidance, and a delay in the Kamps acquisition,” said Mr. Ng. “We believe the shares of SPB could be range bound until the company raises common equity to right-size the balance sheet. Given the attractive and sustainable dividend yield, we believe the shares of SPB can be appropriate for patient income investors.”
* Desjardins Securities’ David Newman to $14 from $16 with a “buy” rating.
“With the sell-off reflecting the underwhelming guidance (related to timing) and manageable leverage, we are maintaining our Buy rating on the stock.,” he said.
* BMO’s Joel Jackson to $12.50 from $13 with a “sector perform” rating.
“We appreciate SPB’s safe/ attractive dividend though believe value creation expectations from the U.S. propane acquisition strategy have been unreasonably high plus industry peer multiples have contracted,” said Mr. Jackson. “This as despite numerous asset sales and acquisitions, and operating environments, SPB seems stuck in a 15-year $11-12 per share range when ignoring transient periods above and below that range.”
* TD Securities’ Daryl Young to $16 from $17.50 with a “buy” rating.