UPDATE: D.A. Davidson Initiates Coverage on Albany International Corp. with Buy Rating on Strong Cashflow, Growth Opportunities

In a report published Tuesday, D.A. Davidson analyst JB Groh initiated coverage on

with a Buy rating and $43.00 price target. In the report, D.A. Davidson noted, “Our target is based on a sum-of-the-parts type valuation. We are valuing Albany's Machine Clothing (MC) business as a 5x EV/EBITDA multiple and the Albany Engineered Composites (AEC) business at $300 million (based on a recent transaction with Safran and industry average multiples once AEC ramps up). AIN operates in two reporting segments: Machine Clothing and Albany Engineered Composites. Machine Clothing is a consumable product used on paper-making machines and offers Albany strong cashflow in a relatively stable environment (2%-3% growth per year). The segment is not capital intensive, thereby permitting AIN to spend its excess cash flow on new and existing opportunities on the AEC side of the business. We view the MC segment as a stable, almost bank-like, source of income that will help AIN fund most of AEC's new projects in the near future.” Albany International Corp. closed on Monday at $33.42.