Jefferies Cuts Price Target on Essendant (ESND) to $18 Following EPS Miss
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Jefferies maintained a Hold rating on Essendant (NASDAQ: ESND), and cut the price target to $18.00 (from $23.50), following the company's 3Q earnings report. EPS of $0.57 missed the Street’s expectations for $0.67. The -55 bps y-y GM% decline was the primary driver of the EPS miss. Continued topline weakness and detrimental GM% factors (detailed above) lead to new sales guidance of $5.325 - $5.375 bn (down from $5.4-5.475 bn) and EPS guidance of $1.75 - $1.90 (down from $2.15-$2.30).
Analyst Daniel Binder commented, "Customer and product mix shifts weighed on Q3 GM%, leading to a $0.10 miss. Industry consolidation is causing volumes shift to lower margin large accounts while growth in low-margin cut-sheet paper continues to hurt margin mix. Lower than expected sales volumes and inventory cuts are leading to lower vendor allowances. Mgmt. is reacting to eroding EBIT% but is early on in its efforts to optimize pricing, reduce sourcing costs, and lower SG&A."
Shares of Essendant closed at $18.68 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change
Related EntitiesJefferies & Co, Earnings
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