Matthews International Shares Present 17% Upside, Buckingham Says In Bullish Initiation

Matthews International Corp MATW, which provides brand solutions, memorialization products and industrial products, represents an attractive investment opportunity according to Buckingham Research Group.

The Analyst

James Clement initiated coverage of shares with a Buy rating and a $61 price target.

The Thesis

Matthews International's Brand Solutions business should get better going forward, shaking off the impact of zero-based budgeting, SKU rationalization on grocery store shelves, and a timing distortion created by new nutrition disclosure guidelines form the Obama administration, Clement said in a Tuesday note.

The analyst views the Memorialization business to be cyclically-resistant and competitively protected. The death-care services industry, according to the analyst, is heavily consolidated, with Matthews International and Hillenbrand, Inc. HI almost holding duopolistic position in the industry.

Clement said, notwithstanding muted organic top-line growth in the segment, margins are healthy due to a healthy degree of pricing power.

With Matthews International, Buckingham said investors are getting a free call option on its Industrial Technologies business. By 2020, the firm said revenue from this segment would increase up to 13 percent.

"The EBITDA margin should approach 17% and, over time, should comfortably exceed 20%, in our opinion," the firm added.

Price Action

At time of writing, shares of Matthews International traded around $49.26.

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