Baird analysts expect IHS Inc. IHS to face Markit Ltd MRKT merger headwinds. However, the brokerage finds the stock to be an attractive one. It has a Neutral rating and slashed the price objective to $122 from $132.
The brokerage believes results, as well as fine-tuned guidance included compensating positives and negatives. For instance, it named Transportation/Auto as performing exceptionally well. However, the company's resources, as well as Resources/energy bookings have yet to see the stability.
The analysts wrote in a note, "Organic subscription revenue trends are soft, but margin performance and guidance is excellent. We view risk/reward increasingly favorably in standalone IHS, but are looking to gain conviction in MRKT (not covered) ahead of close of "merger of equals."
The analysts added, "We find current risk/reward in pre-merger IHS intriguing, given combination of: - Valuation, trading at ~14.4x NTM adj. FCF/sh. (using our adj. EBITDA estimate and assuming ~65% FCF conversion), with what we view as slightly elevated but reasonable financial leverage (3.5x net debt/LTM EBITDA)."
The brokerage believes its IHS Energy business was challenged by certain "difficult end-market conditions." The analysts also think that bookings have yet to see stabilization. However, the brokerage said it view IHS Energy as a strong, wide moat business.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.