Scotia Capital/ Stifel Bumps & Comments'Scotia Capital’s Michael Doumet raised his Russel Metals Inc. (RUS-T +7.71%increase
) target to $40 from $38, keeping a “sector perform” rating, while Stifel’s Ian Gillies bumped his target to $42.50 from $42 with a “buy”rating. The average is $39.90.
“We came away from RUS’ strong quarter with increased confidence given the constructive outlook and improved capital allocation optionality,” said Mr. Gillies. “We believe the next catalyst is M&A. The balance sheet can easily fund bolt-on acquisitions and could withstand very large acquisitions with current liquidity in place of $768 mm and our estimated capacity of roughly $1.0 bn. In our view, the stock’s valuation still screens attractively given its 2024E P/E and EV/EBITDA lag the peers by 1.4 times and 1.3 times at 9.3 times and 4.6 times. FCF yield in 2024 of 11.7 per cent is highest amongst the steel distributor peers.”