In a report published Tuesday, D.A. Davidson & Co. analyst Steven Chercover initiated coverage on Neenah Paper, Inc. NP with a Buy rating, establishing at $50.00 price target.
According to the report, some leading factors to the coverage initiation include NP's growth trajectory, forecasted cash flow and valuation. NP currently pays a $0.96 annual dividend (2.37% yield) which should increase over time.
“The most likely scenario for growth is via acquisition,” the report asserted. “Management has made no secret of its desire to grow in niche markets like filtration.” Key criteria are profitable, growing markets within geographies and product lines that complement current businesses. With the balance sheet significantly improved over the past five years, we believe a $300-$400 million acquisition is feasible and could add significant value to the firm.”
Some highlights from the report included:
-”Neenah's Fine Paper business operates in the highly consolidated niche luxury paper market.”
-”We are introducing 2013, 2014, and 2015 operating EPS estimates of $2.71, $3.08, and $3.60.”
NP closed Monday at $40.64 with shares trading down at 1.31. percent.
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