KeyBanc Downgrades McGrath Rentcorp (MGRC) to Hold after Q3
KeyBanc downgraded McGrath Rentcorp (NASDAQ: MGRC) from Buy to Hold following Q3 results.
The firm comments, "Following McGrath RentCorp's 3Q12 earnings release (reported 3Q12 EPS of $0.50, $0.01 below our estimate of $0.51 and in line with consensus of $0.50) and subsequent call, we are downgrading the shares to HOLD from BUY. While the quarter was largely in line with our lowered expectations (with the exception of the considerable shortfall at unexpected challenges at its non-core Enviroplex segment), we are reducing our rating primarily due to our view that the shares lack a near-term catalyst and therefore at $26.38, we see insufficient upside to justify raising our $27 price target."
"MGRC is experiencing several near-term challenges, including transitory headwinds in its Adler Tank business stemming primarily from weakness in dry gas drilling in the Marcellus shale, persistent softness in its legacy Mobile Modular segment (especially in California) and most recently operational inefficiencies and subsequent revenue delays in its non-core Enviroplex segment (more below). While the issue at Enviroplex could dissipate over the next one to two quarters, and some early leading indicators for Mobile Modular and Adler Tanks are trending positive, we have limited visibility on when fundamentals will meaningfully recover at these two important segments. As a result, we prefer to downgrade the shares and wait for better visibility."
For an analyst ratings summary and ratings history on McGrath Rentcorp click here. For more ratings news on McGrath Rentcorp click here.
Shares of McGrath Rentcorp closed at $26.38 yesterday, with a 52 week range of $22.93-$33.35.
The firm comments, "Following McGrath RentCorp's 3Q12 earnings release (reported 3Q12 EPS of $0.50, $0.01 below our estimate of $0.51 and in line with consensus of $0.50) and subsequent call, we are downgrading the shares to HOLD from BUY. While the quarter was largely in line with our lowered expectations (with the exception of the considerable shortfall at unexpected challenges at its non-core Enviroplex segment), we are reducing our rating primarily due to our view that the shares lack a near-term catalyst and therefore at $26.38, we see insufficient upside to justify raising our $27 price target."
"MGRC is experiencing several near-term challenges, including transitory headwinds in its Adler Tank business stemming primarily from weakness in dry gas drilling in the Marcellus shale, persistent softness in its legacy Mobile Modular segment (especially in California) and most recently operational inefficiencies and subsequent revenue delays in its non-core Enviroplex segment (more below). While the issue at Enviroplex could dissipate over the next one to two quarters, and some early leading indicators for Mobile Modular and Adler Tanks are trending positive, we have limited visibility on when fundamentals will meaningfully recover at these two important segments. As a result, we prefer to downgrade the shares and wait for better visibility."
For an analyst ratings summary and ratings history on McGrath Rentcorp click here. For more ratings news on McGrath Rentcorp click here.
Shares of McGrath Rentcorp closed at $26.38 yesterday, with a 52 week range of $22.93-$33.35.