Morgan Stanley Initiates Coverage On Neff, Notes Oil & Gas 'Overhang' In Near-Term
Nicole DeBlase of Morgan Stanley on Tuesday initiated coverage of Neff Corp (NYSE: NEFF) with an Equal-Weight rating and $19 price target.
"Although our $19 price target implies 52 percent upside versus the current share price, we stay on the sidelines for now given near-term headwinds and lower visibility related to oil price weakness," DeBlase wrote.
DeBlase notes that Neff's 52 percent exposure to U.S. Non-Residential Construction is attractive, the company's relatively high estimated 23 percent exposure to oil and gas is a concern. The analyst also adds that the company has a “weak” free cash flow profile relative to its peers.
The analyst states that her views could change and the company's multiple could expand over time, however it will require a strong execution and very high net leverage. In addition, if the company proves an ability to generate free cash flow and pay down leverage, an upgrade may be warranted.
Latest Ratings for NEFF
|Apr 2016||Avondale Partners||Maintains||Market Perform|
|Mar 2016||Bank of America||Downgrades||Neutral||Underperform|
|Mar 2015||Wells Fargo||Initiates Coverage on||Market Perform|
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.