Roth: Time To Buy Horizon Global, It's Worth $12

• Horizon Global Corp. HZN has seen a decline of 36.87 percent in its share price, which hit a low of $8.59 on October 2.
• Roth Capital’s Matt Koranda has initiated coverage of the company with a Buy rating and price target of $12.
• Following its spinoff from TriMas Corp. TRS, Koranda believes that Horizon Global is well positioned to see stable growth and margin expansion.

According to the Roth Capital report, Horizon Global is a “global leader in custom-engineered towing, trailering, and cargo management solutions,” and is expected to see “steady cash generation” going forward.

Analyst Matt Koranda believes that the company would use this cash to pay down debt, invest in “organic initiatives” and make “strategic acquisitions.” Horizon Global received investments worth $50 million from its parent, which positions the company well for 3-5 percent organic revenue growth and margin expansion.

“While HZN sees long term growth driven in part by emerging markets like China and Brazil, near term exposure to these markets is limited, which we view as a positive,” Koranda stated.

In addition, the customer consolidation and FX headwinds facing the company are expected to subside in the coming quarter, which would drive sales growth of 4 percent in 2016. However, the 2015 revenue is expected to declined 4.2 percent due to FX/macro headwinds, as well as consolidation among Horizon Global’s distribution customers.

Koranda also expects the company see near-term organic growth, “as HZN expands in its original equipment and eCommerce channels, which play to two of HZN’s key strengths: its global manufacturing footprint and brand leadership.”

In the longer term, China and the emerging markets of Latin America are expected to drive growth, with the middle class continuing to grow and adopt a more active lifestyle.