Shares of SiteOne Landscape Supply Inc SITE continued higher Tuesday, a day after sell-side analysts initiated a flood of new coverage as the IPO quiet period expired for underwriters.
William Blair's Ryan Merkel was one of two sell-side analysts to initiate coverage on SiteOne on Tuesday. Merkel assigned a Market Perform rating on the stock.
"... we view shares as reasonably valued at current levels and prefer to wait for a better risk/reward profile," Merkel said.
Amid the valuation comment, the William Blair analyst highlighted three positive points for SiteOne and its investors.
- "Leading consolidator in highly fragmented market.
- Company-specific initiatives and end-market tailwinds will drive organic growth.
- Experienced management team."
Merkel pointed to several key risks, including "cyclical new construction (37% of sales) and repair and upgrade
(18%) demand trends" and "an aggressive acquisition strategy [which] creates the chance of operational slip-ups, errors in capital allocation, or falling short of communicated financial targets."
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