Deutsche Bank Maintains Hold On Masco, Increases PT To $24


In a research report published today, Deutsche Bank analyst Nishu Sood maintained a Hold rating on Masco (NYSE:MAS) and increased his price target to $24, following the company’s announcement today of installation services. 

Sood wrote, “With so much investor focus having built up this year on the portfolio aspect of Masco’s strategic review, we think today’s announced spin of installation services was mostly anticipated. In our view, this left investor reaction more focused on corporate cost reductions. With that also now priced into Masco’s stock, investors’ focus will likely shift to execution of operational improvements in business segments such as cabinets. While nothing was announced specifically today in this regard, we are encouraged by management’s consistent follow through on strategic initiatives laid out earlier this year.”

Sood continued, “We raise our estimates to reflect corporate cost cutting and share repurchases, which drives our target price up to $24/share; however, with investors already having priced in some portfolio action this limits current further upside. As a result, we maintain our Hold rating. 3Q14 EPS goes from $0.30 to $0.25 on charges associated with cost cutting ($30mm), and FY14 from $0.98 to $0.95 as 4Q includes the benefit of cost cutting and some share repurchases. FY15 and FY16 estimates increase as we incorporate recent cost cutting initiatives and share repurchases. 2015 EPS is now $1.36 (up from $1.23) and 2016 is now $1.78 (up from $1.55). Our target price increased as we increased our multiple on EBITDA to 9.0x (vs. 8.3x) to reflect strategic changes. Risks for Masco include strategy execution and trends in repair/remodeling in the US.” 

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Nishu Sood has a total average return of -9.7% and a 25% success rate. Sood is ranked #3111 out of 3329 analysts.

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