UPDATE: BMO Capital Markets Reiterates Underperform Rating, Lowers PT on Mercer International
In a report published Wednesday, BMO Capital Markets reiterated its Underperform rating on Mercer International (NASDAQ: MERC), but slightly lowered its price target from $5.50 to $5.00.
BMO Capital noted, “The company, combined with its energy-producing assets, is low cost; however, based on our forecast, the stock is relatively expensive. D/D+E at 0.68x is high but $468 million out of the total net debt of $651 million is guaranteed by the German government. This guarantee may reduce the debt risk of the company but interest still has to be paid. Furthermore, we consider the recently announced share buyback as highly unlikely. We are lowering our target price to $5.00 from $5.50. This represents 7.2x our 2013E EV/EBITDA.”
Mercer International closed on Tuesday at $5.78.
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