Morgan Stanley on Martin Marietta Materials (MLM) Earnings: 'We expect a positive stock reaction'
Morgan Stanley analyst Angel Castillo reiterated an Overweight rating and $595.00 price target on Martin Marietta Materials (NYSE: MLM)
The analyst comments "We expect a positive stock reaction to MLM's 4Q23 EPS beat and full year 2024 outlook and commentary that we think modestly exceeded expectations. MLM reported 4Q23 EPS from Cont. Operating EPS of $4.63 versus MSe of $4.74 and consensus estimate of $4.00. Relative to our EPS estimates, the beat was due to stronger Magnesia Specialties Business gross profit (+$0.04), more than offset by softer Building Materials Business gross profit (-$0.36). Looking forward, MLM issued its full year 2024 Adjusted EBITDA guidance of $2,140-$2,340M (inclusive of AFS acquisition and South Texas divestiture, but excluding pending BWI acquisition). Importantly, the company indicated that its guidance would have been $2,370M if it included the BWI acquisition. While these numbers are not apples to apples with MSe of $2,320M and consensus of $2,326M, which we think reflect a mixture of pro-forma and legacy MLM forecasts (MSe is not pro-forma), our sense is that the buy side bogey for a fully pro-forma EBITDA guide was closer to the $2,300- 2,370M. Said another way, we expect this forward looking guide to be viewed as better than expected all in. Of note, the company also reiterated its expectations for double digits Aggregates pricing, which it formalized at +11% for 2024 and flat Aggregates shipment volumes. We expect the discussion on the call to focus on the potential synergies and pricing upside to company's recently completed and announced acquisitions, as well as any more specific end-market commentary that helps better delineate the degree of optimism or conservatism baked into the guide. Please see Exhibit 1 inside for more details on actuals vs. estimates."
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Shares of Martin Marietta Materials closed at $527.25 yesterday.