UPDATE: ISI Group Upgrades Monro Muffler Brake to Buy on Growth Outlook
ISI Group upgraded Monro Muffler Brake (NASDAQ: MNRO) from Neutral to Buy and raised the price target from $35.00 to $42.00.
ISI Group noted, "We are upgrading MNRO to Buy as 60 years of history suggest the end of a 2yr U.S. tire deferral cycle is near, while M&A accretion and Chinese tire tariff reductions prime the pump for 30%+ EPS growth in FY14. Comps and margins have eroded 5.5% and 300bps respectively YTD, crimping earnings and keeping MNRO in the penalty box. That said, we believe comp pressures are more cyclical (weather/ tire deferral) than secular (shrinking sweet spot of 4-12 yr old vehicles). With $0.15-$0.20 of EPS accretion attainable for 2014 (15% EPS growth), and a ~$0.15 EPS tailwind from tire/ oil sourcing savings, we see upside to $42 in our Base Case."
Monro Muffler Brake closed at $37.25 on Friday.
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Tags: ISI Group