DA Davidson Reiterates Buy Rating on Advanced Drainage Systems (WMS) on Deal to Acquire StormTrap

DA Davidson analyst Garik Shmois reiterated a Buy rating and $190.00 price target on Advanced Drainage Systems (NYSE: WMS).

The analyst commented, "WMS announced a deal to acquire StormTrap for $450M (post-NPV tax benefits). The pre-synergy multiple of 10x is below what WMS paid for recent deals and is in line with, to modestly accretive to, the company's current trading multiple. The deal should be well received, as it appears to be a solid bolt-on acquisition at a fair price. StormTrap is initially margin dilutive, but assuming synergies are realized, EBITDA margins should become more consistent with WMS's legacy margins over time. We note that most company M&A targets fit this theme of modest margin dilution at first."

For an analyst ratings summary and ratings history on Advanced Drainage Systems click here. For more ratings news on Advanced Drainage Systems click here.

Shares of Advanced Drainage Systems closed at $129.43 yesterday.

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