TSX:CCL.A - Post Discussion
Post by
retiredcf on Nov 18, 2024 8:25am
Stifel
Stifel’s Daryl Young hiked his target for CCL Industries Inc. to $90 from $85 with a “buy” rating. The average is $89.70. “Q3/24 was another solid quarter with healthy organic growth (6.9 per cent), strong FCF generation, and $100-million of share repurchases,” Mr. Young said. “However, this was overshadowed by a slightly weaker-than-expected near-term outlook as the CCL Segment is seeing pockets of weakness alongside the stretched consumer, and given new facility start-up costs and deflationary pressures which are tempering margins. To be clear, the demand environment remains broadly healthy and management highlighted strong October results, but we think the likelihood of recent “beat-and-raise” dynamics has diminished. Looking forward, CCL remains on very good footing, generating dependable FCF, and is poised to rapidly deleverage. Based on our estimates and the current share price, CCL will need to repurchase 5 per cent of its shares annually to keep leverage from falling below 1.0 times. Layer on management’s relatively constructive outlook for M&A, and we think CCL can comfortably continue driving high-single-digit EPS growth (we model buybacks but not M&A).”
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