UPDATE: Oppenheimer Upgrades McGrath Rentcorp (MGRC) to Outperform
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(updated to add analyst comments)
Oppenheimer analyst Scott Schneeberger upgraded McGrath Rentcorp (NASDAQ: MGRC) from to Outperform with a price target of $74.00.
The analyst commented, "We recently attended investor meetings with MGRC's CEO/CFO following its extended record of quarterly outperformance in COVID-19 challenged 2Q20. We see the potential for 1H20 to represent a trough/3Q20 adj. EBITDA consensus of $59M (mid-point of $54-64M guidance) to prove conservative. Believing this could be a catalyst and viewing MGRC undervalued, we upgrade from Perform to Outperform and establish a $74 target. Our target anticipates MGRC's multiple expanding from 7.1x EV/EBITDA our 2021E adj. EBITDA of $242M (conservatively maintained at +5% y/y) to 8.2x, which is consistent with its three-year average. Appreciating MGRC's ROIC/FCF focus and management's caution in the current environment, we view the risk/reward profile of segment expectations/MGRC's stock price favorable."
Shares of McGrath Rentcorp closed at $63.41 yesterday.
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