Seaport Global Securities Downgrades CECO Environmental (CECE) to Neutral
- Donald Trump Sworn in as 45th U.S. President
- Wall Street ends higher as Trump becomes president
- Walgreens Boots Alliance (WBA) Said to Face Antitrust Concern for Rite Aid (RAD) Fix - Bloomberg
- Bristol-Myers Squibb (BMY) Says It Won't Pursue Accelerated U.S. Regulatory Pathway for Opdivo Plus Yervoy in Lung Cancer
- Apple (AAPL) Sues Qualcomm (QCOM) Over Patent Royalties in Antitrust Case - Bloomberg
Get the Pulse of the Market with StreetInsider.com's Pulse Picks. Get your Free Trial here.
Seaport Global Securities downgraded CECO Environmental (NASDAQ: CECE) from Buy to Neutral and maintains a $13 price target, citing challenging project environment.
Analyst Ryan Cassil commented, "We are reducing our rating to Neutral (from Buy) as shares of CECE approach our price target of $13 (unchanged) and the story becomes less about deleveraging the balance sheet and integrating the formerly inefficient PMFG business and more about driving organic growth. Part of our thesis for the company was predicated on reducing SG&A costs that topped 22% of sales following the PMFG deal, which now appear sustainably below 20% as management reduced the duplicative footprint and drove cost synergies from the once unprofitable PMFG business. In concert with driving these synergies, CECE reduced net leverage, which ended 2015 with net debt/EBITDA at 3.0x, to an estimated 1.4x ending 2016 by using stronger cash flows from operations and sale leasebacks of PMFG assets. The two pillars of these actions have largely played out and CECE now must find organic growth in what is expected to be a challenging industrial environment in the US and China. Management noted the need to be more aggressive on pricing with large projects being bid in Q4, which will cap on margins and overall top-line growth in the intermediate term. CECE does stand to benefit should there be an increase in corporate investment with the new President-elect in the United States, but we can't bank on it. However, on the positive side, we continue to favor the push for greater aftermarket/recurring revenue growth over the long term and believe shareholders will be rewarded through better margins and a reduced level of top-line cyclicality."
Shares of CECO Environmental closed at $12.87 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- JPMorgan Cuts Teva Pharma (TEVA) to Neutral Amid Challenging Generic Environment
- UPDATE: SunTrust Robinson Humphrey Downgrades Pennsylvania Real Estate Investment Trust (PEI) to Hold
- UPDATE: SunTrust Robinson Humphrey Downgrades First Potomac (FPO) to Hold
Create E-mail Alert Related CategoriesAnalyst Comments, Downgrades
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!