Tuesday, Credit Suisse initiated coverage of Mistras Group, Inc. (MG) stock with an Outperform rating and a price target of $16. The brokerage established its 2010 pro forma EPS estimate of $0.43 on revenue of $266.4 million, and its 2011 estimate of $0.63 on revenue of $311.5 million.
Analyst Stein estimates the asset protection services industry at about $10 billion per year. Mistras currently captures less than 3% market share today. The analyst believes the company's unique technology, highly qualified employees, and access to capital will enable Mistras to take share from the 80% of this market that is served by a combination of vertically integrated sources and sub-scale vendors.
The analyst said that over the last 4 years, Mistras has acquired 18 companies with an aggregate $90 million in annual sales. These acquisitions have added about 8% revenue growth to the company's organic revenue growth of about 20% per year.
The analyst noted that during this period the company has generated expanding returns on invested capital that have generally exceeded the company's cost of capital, suggesting the acquisitions create value for equity holders.
At about $12.50, Mistras' stock trades at 29 times the analyst's fiscal 2010 EPS estimate of $0.43 and 20 times his fiscal 2011 EPS estimate of $0.63. While these valuation metrics appear rich, the analyst believes even higher valuation is justified owing to his view of MG's near-term and medium-term EPS growth of 50% and 25%, respectively.
The analyst's price target for MG is $16, based on his discounted cash flow analysis. This valuation equates to 32 times the analyst's calendar 2010 EPS estimate of $0.51, and 26 times his fiscal 2011 EPS estimate of $0.63.
Currently, MG is down $0.15 or 1.20% and trading at $12.39.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.