KeyBanc Starts Quality Distribution (QLTY) at Hold; Emerging Growth Balanced by Leverage Profile

KeyBanc initiates coverage on Quality Distribution (NASDAQ: QLTY) with a Hold.

KeyBanc analyst said, "In our opinion, QLTY's core chemical tank truck business is favorably positioned longer term given its industry-leading position and asset-light operating model. We believe these characteristics support continued share gains longer term without significant capital investment, as well as a more stable, less cyclical earnings stream over a cycle. In addition, QLTY's emerging presence within the frac shale energy market offers an attractive platform for growth in coming years, reflecting favorable end market demand and internal expansion initiatives. Combined with growth in higher margin intermodal container tank offerings, as well as potential balance sheet deleveraging, we believe meaningful upside earnings potential exists relative to prior peak. However, with debt-to-LTM EBITDA at 4.2x and internal growth initiatives likely limiting debt reduction near term, we believe shares are fairly valued pending greater evidence of profitable growth within the frac shale energy market, a stronger macro environment and/or an improved financial position."

For an analyst ratings summary and ratings history on Quality Distribution click here. For more ratings news on Quality Distribution click here.

Shares of Quality Distribution closed at $10.16 yesterday.

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