Americold Realty Trust recently IPO'd, offering 45.3 million shares at $16 per share. The shares were listed on the Nasdaq at $17.50, ending the debut session at $17.77, a gain of 11 percent from the offer price.
The Analyst
Bank of America Merrill Lynch analyst Joshua Dennerlein initiated coverage of Americold Realty with a Buy rating and a $20 price target.
The Thesis
Americold Realty is in an anti-cyclical industry producing consistent revenue growth, boasting of market-leading position, Dennerlein said in a note. He also likes the company for its first-mover advantage in a niche asset class.
Additionally, the analyst likes the development returns the company generates compared traditional operators. He sees several avenues for strong external growth for the company, as he estimates solid EBITDA growth of 5.2 percent in 2018 and 8.1 percent in 2019.
If acquisitions materialize, the analyst sees outperformance relative to his estimates. The analyst assumes $103 million in development spending in 2018, and then $75 million per year through 2020.
"We pencil in healthy returns on invested capital of 12.5% for COLD's development projects," Dennerlein said.
The Price Action
At time of writing, shares were trading up 2.2 percent at $17.92.
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