UPDATE: UBS Downgrades SiteOne Landscape Supply (SITE) to Sell

(updating comment)

UBS analyst Damian Karas downgraded SiteOne Landscape Supply (NYSE: SITE) from Neutral to Sell with a price target of $85.00 (from $80.00).

The analyst comments "We are downgrading SITE to Sell from Neutral. Following recent stock strength (SITE +24% YTD vs. EEMI -11%/S&P -2%), we now believe valuation has stretched beyond the company's near-term growth potential; we assess upside/downside of ~1:2.5. The stock is pricing in 10% revenue growth vs. our 3.3% 2-yr estimate, and we see 2H risks which could upset valuation premium: 1) fewer new landscape projects (41% of sales) as resi lags housing starts 6-9 months, and 2) private nonres declines; and 3) >30% concentration in TX/FL/CA where COVID-19 cases have reaccelerated. In 2Q, we expect SITE to perform better than was originally feared (we model 2% organic decline) and '20 Cons. ests should increase (priced in), but we do not expect SITE to return to sustainable MSD+ organic growth. Future acquisitions could bring upside to our PT, but we expect below normal M&A contribution in '21 given current SITE pause on capital deployment."

For an analyst ratings summary and ratings history on SiteOne Landscape Supply click here. For more ratings news on SiteOne Landscape Supply click here.

Shares of SiteOne Landscape Supply closed at $110.58 yesterday.

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