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Morgan Stanley Initiates Coverage On Neff, Notes Oil & Gas 'Overhang' In Near-Term

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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

DateFirmActionFromTo
Mar 2017Bank of AmericaUpgradesUnderperformBuy
Nov 2016JefferiesDowngradesBuyHold
Apr 2016Avondale PartnersMaintainsMarket Perform

View More Analyst Ratings for NEFF
View the Latest Analyst Ratings

Posted-In: Morgan Stanley Nicole Deblase oil and gas Residntial ConstructionAnalyst Color Price Target Initiation Analyst Ratings

 

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