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Jefferies Upgrades Energizer, Sees 'Limited Downside'


Jefferies upgraded Energizer Holdings, Inc. (NYSE: ENR) from Hold to Buy and raised its price target from $123 to $155.

Analyst Kevin Grundy made the upgrade "ahead of the company’s spin-off of its battery business (expected 7/1). While group valuations look rich, there is clear scope for multiple expansion in both batteries (improving profitability) and personal care (strategic optionality).”

“We see far less downside risk with the 7x Duracell multiple providing a valuation floor in batteries and any personal care weakness looked past on strategic considerations,” according to the analyst note.

“Relative to the 7x EV/EBITDA that BRK will pay for Duracell, low growth staples stocks trade at 11.5-12x leaving ample room for ENR's battery biz to re-rate, particularly should (i) price rationality in the industry prevail, augmented by (ii) further productivity savings - both of which we see as likely,” according to Grundy.

Grundy also felt that the personal care business should see a mid-teens EBITDA multiple and that both business should see multiple expansion.

The price target was based on a "SOTP analysis with 15.5x CY4Q15 NTM for personal care and 9x for household (vs. NTM peer avg. of 13.5x), which implied 12.7x for total ENR."

Energizer recently traded at $131.97, up 0.44 percent.

Latest Ratings for ENR

Nov 2020Morgan StanleyMaintainsOverweight
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Aug 2020Morgan StanleyMaintainsOverweight

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