Scotia Capital Scotia Capital’s George Doumet reduced his Park Lawn Corp. (PLC-T) target to $33 from $37 with a “sector outperform” rating. The average is $37.69.
“We are lowering our margin assumptions for the upcoming quarters given continued pressured pre-need (albeit improving over Q2)/at need volumes (which are trending below historical levels) and continued pricing/costs lags,” he said. “We expect improving quarter-over-quarter trends (from an organic growth and margin standpoint), with the most meaningful improvements expected in the Q4/Q1 timeframe.
“PLC shares are down 40 per cent-plus year-to-date with the company’s trading multiple compressing by ~30%. As is the case with most of our M&A growth centric-stories, we expect the multiple to expand once we see a stabilization in organic volumes and improved visibility on the margin recovery. PLC’s growth via acquisition model remains healthy with a material public/private arbitrage gap (at 3 times to 5 times on EBITDA) and adequate balance sheet capacity to fund future M&A (at 2 times 2023 estimatedexit vs. an estimated comfort zone closer to mid 3 times).”