Following the announcement of its $140-million acquisition of Woolf Distributing Company Inc., CIBC’s Hamir Patel increased his Adentra Inc. target to $52 from $51, reiterating an “outperformer” recommendation. Other changes include: Acumen Capital’s Nick Corcoran to $56 from $54 with a “buy” rating, Stifel’s Ian Gillies to $55 from $50 with a “buy” rating and Scotia’s Jonathan Goldman to $52.50 from $51 with a “sector outperform” rating. The average on the Street is $51.64.
“The transaction advances the goal of adding $800-million in sales via M&A over the next five years through 2028, but perhaps more importantly, it further shifts the mix to higher margin specialty products and channels,” said Mr. Goldman. “On a pro forma basis, we estimate value-add and Pro Dealer channel now account for 14 per cent and 32 per cent of consolidated sales, respectively. As investors see continued evidence of structural margin expansion via improved mix, we think shares will re-rate closer to specialty building product peers that have historically traded at a 2.5 times premium.”