Piper Jaffray Raises PT on Accuity Brands (AYI) Sharply as Data Points to Healthy End Market Growth

Piper Jaffray analyst, Mike Ritzenthaler, updated his Commercial & Industrial Lighting index and believes the results present a favorable tailwind for Acuity Brands (NYSE: AYI) organic growth. The index indicates positive and steady improvement in several lighting end markets which we believe will converge with further market share gains from Acuity’s strong C&I channel access, product portfolio and expansion into higher margin software and controls.

The data shows growth of ~2.4% in calendar 4Q15, following ~3% growth in 3Q15, with this modest sequential decline predominantly stemming from the way we time-correct for the ABI. Growth in other areas is being driven by construction spending (+15% y/y) and C&I loan demand (+11.5%).

Vacancy rates across office, retail and industrial buildings continue to decline on a month-to-month basis and should translate into continued retrofit opportunities, while the pace of construction spending and C&I loan demand continues to accelerate on a YoY basis.Vacancy rates continue to ratchet downward steadily, with 1.0%, 0.5% and 1% declines across office, retail, and industrial spaces, respectively.

Sequentially better end markets gives us further confidence that the retrofit drivers that have been benefiting Acuity’s results over the past 12-15 months are still firmly in effect.

The analyst maintained his Overweight rating but raised his PT from $220 to $275.

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

Shares of Acuity Brands closed at $226.36 yesterday.

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