UPDATE: BMO Capital Markets Initiates Coverage on Bright Horizons Family Solutions with Market Perform Rating, $30 PT on Expected Growth

In a report published Wednesday, BMO Capital Markets initiated coverage on Bright Horizons Family Solutions BFAM with a Market Perform rating and $30.00 price target. BMO Capital Markets noted, “We are launching coverage on Bright Horizons with a Market Perform rating and $30 target price. Bright Horizons is the largest provider of center-based childcare services, and we believe it offers a unique opportunity to invest in a business model characterized by low-risk, high-visibility, long-term steady growth and margin expansion. While the company operates in a roughly $21 billion addressable market, we believe penetration rates among larger employers (50,000+ employees) are relatively high. However, we expect growth to come from several channels including: increasing penetration of smaller employers (1,000-50,000 employees); international expansion (15% of revenues are non-US); and cross-selling peripheral products (13% of revenues are from non-core services). We also expect leverage and business mix to continue to drive margin expansion. Lastly, our forecasts may prove conservative as our model excludes acquisitions (30% of recent annual revenue growth) and does not assume excess cash is used to pay down debt.” Bright Horizons Family Solutions closed on Tuesday at $28.35.