Compass Point Starts FleetCor Technologies (FLT) at Neutral

Compass Point initiates coverage on FleetCor Technologies (NYSE: FLT) with a Neutral rating and a price target of $145.00.

Analyst John Williams commented, "We initiate coverage of FLT with a Neutral rating and $145 price target. FLT benefits from solid secular trends, a strong competitive position in the underpenetrated fleet card segment, a strong global footprint, and a strong track record of smart acquisitions and portfolio wins. We are Neutral-rated and view the risk/reward as balanced given a strong recent move, not-discounted valuation (23.0x 2016 P/E, 17.1x EV/EBITDA), and the economic sensitivity of the business. We (1) note that FLT has far less sensitivity to fuel prices (we estimate 15% of revenue directly exposed, vs. 30-35% at WEX) given spread-based pricing; (2) believe shares should trade at a 10-20% premium to WEX given lower fuel price exposure, greater international exposure, a strong acquisition/partnership track record, and a more aggressive approach (which worked well in an up market between 2010-2015). With leverage now at 2.9x, FLT can pay down debt—but dry powder is more limited now than at any time since the IPO. (3) While FLT estimates are less likely to move lower than WEX estimates, we do not believe the current group setup is favorable—the stocks are not discounted, margins have peaked, and the economy is slowing, not accelerating (we think the best time to buy is when the economy is emerging from recession and vehicles are waiting to be filled to meet demand)."

For an analyst ratings summary and ratings history on FleetCor Technologies click here. For more ratings news on FleetCor Technologies click here.

Shares of FleetCor Technologies closed at $151.02 yesterday.

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