FBR Capital Raises Price Target on Turning Point Brands, Inc. (TPB) to $14 After Meeting with Management

October 11, 2016 7:27 AM EDT
Get Alerts TPB Hot Sheet
Price: $12.99 -0.46%

Rating Summary:
    2 Buy, 0 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 5 | Down: 5 | New: 0
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FBR Capital reiterated an Outperform rating on Turning Point Brands (NYSE: TPB), and raised the price target to $14.00 (from $13.00), after meeting with management. Management indicated that Stoker's has maintained its 2.5% share of the growing moist snuff market over the past ~4 months, and the business continues to grow via word of mouth and advertising. Management also indicated that TPB has accumulated numerous unsolicited offers to buy businesses and is in the process of reviewing them.

Analyst Susan Anderson commented, "We recently hosted upbeat meetings with CEO Larry Wexler, CFO Mark Stegeman, and SVP of Business Planning Jim Murray. Our meetings reaffirmed our fundamental thesis remains intact—that TPB is a unique opportunity in tobacco, driven by rare growth in the stable OTP industry; exposure to high-growth new era forms of tobacco; and stable, solid FCF generation. Additionally, management indicated that acquisition opportunities remain plentiful. As a result, we remain confident TPB is well positioned to expand via accretive acquisitions, and its leverage ratio (~4.1x at 2Q-end) should continue to narrow closer to management's target (2.5x to 3x) as we expect cash flow and EBITDA to increase due to the new capital structure and growth catalysts. We continue to like TPB's asset-light sourcing and marketing model, which allows the company to more efficiently alter product offerings, enter new OTP markets, and maintain lower capital expenditures, and growth opportunity in the OTP industry. We reiterate our Outperform rating and raise our price target to $14 from $13."

For an analyst ratings summary and ratings history on Turning Point Brands click here. For more ratings news on Turning Point Brands click here.

Shares of Turning Point Brands closed at $12.43 yesterday.

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