Wednesday, KeyBanc Capital upgraded Myers Industries Inc. (MYE) shares to Buy from Hold with a price target of $12.
Analyst Christopher Manuel attributed the upgrade based on earnings improvement in 2010 from restructuring, the sale of automotive businesses, lower interest expense and flat volumes, or better, as well as attractive valuation. Over the last six to nine months, MYE has announced a slew of asset restructuring and cost reduction programs that should be fully ramped up in 2010.
In addition, the analyst estimates MYE would achieve $25 million of free cash flow in 2009 that, along with proceeds from asset sales, should allow for about $30 million of debt reduction. The analyst believes his 2010 estimate of $0.75 is conservative in a flat volume environment and could harbor upside toward $1.00/share with a material volume improvement.
At an intra-day price of $9.45, shares are currently trading at 5.0x the analyst's 2010 EBITDA estimate, compared to its peers at 6.4x and MYE's historical EV/EBITDA multiple of 6.7x. Accordingly, the analyst upgraded the stock to Buy and established a price target of $12, which represents 6.0x his 2010 EBITDA estimate.
Currently, MYE is up $0.93 or 10.02% and trading at $10.21.
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