Analysts Making Few Waves in Milacron Coverage

Milacron’s initial public offering was 14,285,714 shares of common stock at $20.00 per share, and all shares were sold by Milacron. The company granted its underwriters a 30-day option to purchase up to an additional 2,142,857 shares of common stock, but this pricing was actually at the low-end of its expected range and shares did not really do well after coming public.

Monday’s closing price was $16.97, which compares to a post-IPO range of $16.62 to $21.30. Milacron has a market cap just north of $1.1 billion. Milacron’s analyst coverage on Tuesday was as follows, with price target data included if available:

• Barclays started it as Overweight with a $25 price target.
• Bank of America Merrill Lynch started as Buy with a $23 price objective.
• Credit Suisse started it as Neutral with a $23 price target.
• Goldman Sachs started as Neutral rating and a $19 price target.
• JPMorgan started it as Neutral with a $20 price target.
• KeyBanc Capital Markets started it as Overweight with a $22 target.
• William Blair started it as Outperform.

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Credit Suisse’s report signaled that Milacron had a superior sales and earnings per share growth profile, but noted that it is in a challenging environment. The Credit Suisse Neutral rating and $23 were based on the following from that report:

The company has a superior organic sales growth profile relative to most of our EE/MI coverage as well as self-help driven by cost cutting and balance sheet deleveraging. These factors should enable a high teens earnings growth in the coming couple of years; however, we would prefer to see further evidence of operational execution as a public company, given the fairly high expectations embedded in our forecasts, and the current challenging demand environment.

Credit Suisse also noted that in the past three years Milacron has enjoyed a 4.5% organic sales growth against a peer average of approximately 2.5%. It was noted also that Milacron has 4% share in the $27 billion global plastics technology and processing industry.