Mettler-Toledo Trading At 23.5x Forward Earnings, Cut By Citi

Citi analyst Dariel Arias believes a time has come for pressing pause on Mettler – Toledo International Inc MTD after the stock outperformed in the last 12-month period. As a result, the brokerage downgraded shares to Neutral from Buy. However, the analyst boosted his price objective on the stock to $400 from $382.

The analyst noted Mettler stock has outperformed in the last one-year period, as well as year-to-date. Arias believes there is no change in the business direction, which is going in the right path. However, he found the need to stay reasonable on valuation as far as the fiscal year 2017 PE, as well as EV/EBITDA multiples are concerned. He cited that it was the reason behind in bumping up the price target while downgrading the stock.

Arias noted shares trade at 23.5x his EPS estimation of $16.13 for the year 2017 currently. That is a 50 percent turn of the shares peak in the last decade. Therefore, he believes the multiples have expanded across the board.

However, the brokerage believes "MTD's premium to the S&P (53%) is now within 2 points of the 5-year maximum and 5-points of the 10-year maximum. On EV/EBITDA, the premium is even higher." Therefore, the question that daunts the investors is that when to enter the counter. The analyst remarked by saying, "We would look to recommend shares again either on a pullback, or should confidence in upside to ‘17/'18 numbers increase."