UPDATE: Stifel Nicolaus Raises PT on Monro Muffler Brake Following Management Presentation
In a report published Wednesday, Stifel Nicolaus analyst James Albertine reiterated a Buy rating on Monro Muffler Brake (NASDAQ: MNRO), and raised the price target from $45.00 to $63.00.
In the report, Stifel Nicolaus noted, “Prior to today, we had expected near term pressure due to the combination of (a) comp (a more gradual comp inflection vs. prior recoveries), (b) GM (delayed benefit from reduced tire costs given the gradual comp recovery, presumably slower inventory turns), and (c) SG&A headwinds (143 new locations in the midst of peak integration costs). According to management, comp is running +3% quarter-to-date and is expected in the +2.5-4.5% range for the full year ahead (well ahead of our -1% expectations), GM will run flat to slightly negative in the year ahead (a little lower than our model), and SG&A leverage will run in the 100-150 bp y/y range this year (ahead of our model). It also appears M&A activity is picking up (MNRO is currently reviewing 8 potential transactions). Given the latest status check, we believe our long-term thesis remains intact, and as such remain cautious related to FY13 EPS estimates while dialing up FY14 and FY15 EPS estimates to reflect the leverage ‘pop' we expect from FY11/FY12 acquisitions.”
Monro Muffler Brake closed on Tuesday at $47.28.
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