On Wednesday, Stifel adjusted its price target for WillScot (NASDAQ:WSC) Mobile Mini (NASDAQ:MINI_old) Holdings Corp. (NASDAQ:WSC), lowering it to $50 from the previous $58, while reaffirming a Buy rating on the stock. The revision was made in anticipation of the company's first-quarter 2024 performance, taking into account several challenges that WillScot Mobile Mini is facing.
The company is navigating through a period marked by weaker nonresidential construction indicators, particularly in sectors such as retail, which is expected to impact the number of units rented in the first half of 2024. Moreover, unfavorable weather conditions have delayed the onset of the construction season, further contributing to the anticipated weaker performance in the near term.
Another factor influencing the revised price target is WillScot Mobile Mini's ongoing regulatory process regarding its acquisition of Mobile Mini (MGRC). The company has received a second request from the Federal Trade Commission (FTC), which, although not a sign of a potential block of the deal, implies additional time and financial costs due to the complexity of the compliance process.
Despite these headwinds, the analyst from Stifel notes that the acquisition of MGRC is still expected to be completed in the second half of 2024. Following the closure of the deal, WillScot Mobile Mini is likely to organize an Analyst Day to provide financial targets and further insights.
The new $50 price target is based on a 9x multiple of Stifel's 2025 EBITDA estimate for WillScot Mobile Mini, reflecting both a reduction in earnings estimates and a reassessment of valuation multiples. This adjustment aligns with a more cautious outlook for the company's performance in the first half of the year, while still maintaining a positive long-term view as indicated by the Buy rating.
InvestingPro Insights
As investors weigh Stifel's revised price target for WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC), InvestingPro data and tips offer additional context for the company's current financial position. With a market cap of $8.47 billion and a P/E ratio of 18.65, WillScot Mobile Mini appears to be trading at a low P/E ratio relative to near-term earnings growth, which is a positive sign for investors looking for value.
The company's impressive gross profit margins stand at 56.41%, highlighting its ability to maintain profitability despite market challenges. Moreover, WillScot Mobile Mini has been profitable over the last twelve months, which could instill confidence in investors about the company's financial health.
InvestingPro Tips suggest that WillScot Mobile Mini's management has been actively involved in share buybacks, a move that can often signal leadership's belief in the company's undervaluation. Additionally, analysts predict that the company will remain profitable this year. For those seeking more comprehensive insights, InvestingPro offers additional tips on WillScot Mobile Mini, which can be accessed with a special offer. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the many other tips that can guide investment decisions.
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