Deutsche Bank Hits Energizer With Buy On 'Environment + ROC + M&A'

In a report published Wednesday, Deutsche Bank analyst Bill Schmitz Jr initiated coverage of

with a Buy rating and a price target of $45. Analyst Bill Schmitz Jr pointed out that Energizer was a part of the battery industry wherein companies were growing by lifting pricing and aggressively cutting costs to expand profits despite minimal top-line growth. "As they have done historically, sweeping this cash and using the balance sheet to opportunistically repurchase stock, pay a healthy dividend and actively seek accretive deals should continue to drive shareholder value in a low rate environment. While not the sexiest name we follow, slow and steady should still win the race," Schmitz Jr wrote. Schmitz Jr said that continued demand for cheaper embedded rechargeable batteries was expected to make Energizer a compelling name in the consumer products platform company. Favorable competitive dynamics and strong free cash flows remain the strong points of Energizer. In the report Deutsche Bank noted, "We believe Energizer will seek out assets similar to ones Spectrum, Jarden and Newell have gobbled up in recent years. Given the tepid growth outlook and relatively cheap multiple, deal consideration set is broad, creating a platform and virtuous cycle of leverage, cash flow acceleration and debt repayment that has served investors well in the past."