On Wednesday, DA Davidson maintained a positive stance on WillScot (NASDAQ:WSC) Mobile Mini (NASDAQ:MINI_old) Holdings Corp. (NASDAQ:WSC), reiterating its Buy rating and a price target of $47.00. The firm's analysis followed the termination of a transaction with Mobile Mini, which had faced regulatory challenges. Instead of pursuing this deal, DA Davidson sees a logical shift in the company's strategy towards share buybacks, considering the current trading level of WillScot Mobile Mini's stock.
The analyst highlighted that while the regulatory pushback poses questions about the company's ability to undertake large-scale transactions within its core verticals, it doesn't rule out the possibility of exploring adjacent areas for growth. The price target is based on an 11 times multiple of the company's estimated EBITDA for the years 2024 and 2025.
Despite some macroeconomic pressures, such as those affecting storage unit occupancy rates, DA Davidson believes the valuation of WillScot Mobile Mini is not burdensome. The firm anticipates that management will identify new growth opportunities.
The analyst's commentary provided insight into the rationale behind maintaining the price target and buy rating, suggesting a confidence in the company's potential to navigate through existing market challenges and capitalize on future prospects.
In other recent news, WillScot Corporation has reported a solid Q2 performance, with revenues rising by 4% year-over-year due to robust demand in various sectors. However, a decrease in non-residential square-foot starts has impacted its storage and smaller modular product lines. Despite this, the company has maintained strong EBITDA and free cash flow margins, even generating $121 million in free cash flow during the quarter.
WillScot has revised its full-year outlook, anticipating lower revenues in the second half of the year. However, the company expects a stronger sequential pickup in Q4 and is optimistic for record growth in 2025. Strategic initiatives underway include a 15% reduction in indirect headcount, brand consolidation under WillScot, and the pending McGrath acquisition.
In addition, the company is making investments in climate-controlled storage and Clearspan categories, which are expected to drive growth into 2025. Despite the revised outlook, WillScot remains confident in sequential unit on rent growth and positive performance in value-added products and services.
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