Loop Capital Reiterates Buy Rating on MasterBrand (MBC)

Loop Capital analyst Garik Shmois reiterated a Buy rating and $20.00 price target on MasterBrand (NYSE: MBC).

The analyst comments "MBC announced the acquisition of premium cabinet manufacturer Supreme Cabinetry Brands from GHK Capital for $520M. We view the deal as a large bolt-on as it compliments MBC's semi-custom/custom dealer-focused product line. There are also opportunities to expand vanity products within the retail channel as well. The acquisition looks large relative to MBC's market cap but is in-line with other deals the company has made historically when under FBIN's umbrella-so integration shouldn't be a big risk. Additionally, at a valuation of ~8.9x ttm EBITDA inclusive of $25M in cash tax benefits and 5.9x inclusive of $28M in synergies, we think the financials make sense as the deal is expected to be accretive to EPS within one year, doesn't include commercial synergies, and the leverage of ~2.5x isn't too punitive when assuming MBC should get down to below 2x leverage within ~2 years of closing."

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

Shares of MasterBrand closed at $16.39 yesterday.

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