TD Securities Reaffirms Their Buy Rating on K-Bro Linen

By Austin Angelo

K-Bro Linen (TSX: KBL), the Materials sector company, has received a rating update from a Wall Street analyst yesterday. The company received a Buy rating from TD Securities’ analyst Lennox Gibbs, with a C$45 price target.

Gibbs noted:

“We are forecasting a sequential uptick in Q2 EBITDA, reflecting incremental revenues, and tapering of the GTA transition costs. Funding and Capital Upgrades Unlock New Opportunities — On April 25, K- Bro secured $57.7 million in funding for what should be the final phase of its five- year capital upgrade. Proceeds will be largely directed to funding the new Toronto and Vancouver facilities. Positive, early market reception for the GTA facility has already confirmed the importance of these upgrades to K-Bro’s competitive positioning. The new GTA facility came on-line in early-February 2017, and K-Bro has already won $7.6 million in new business for the facility — or approximately ~30% of its previous base.”

According to TipRanks.com, Gibbs is a 1-star analyst with an average return of -0.7% and a 30.4% success rate. Gibbs covers the Healthcare sector, focusing on stocks such as Merus Labs International, Concordia Healthcare, and Valeant Pharma.

Currently, the analyst consensus on K-Bro Linen is Moderate Buy and the average price target is C$47.50, representing a 24.1% upside.

In a report issued on May 15, GMP FirstEnergy also reiterated a Buy rating on the stock with a C$50 price target.

K-Bro Linen’s market cap is currently C$305.5M and has a P/E ratio of 26.3.

K-Bro Linen, Inc. engages in the provision of linen services to healthcare institutions hotels, and other commercial accounts. It also engages in the operation of laundry and linen processing facilities which provides a range of general linen and operating room linen processing, management and distribution services. The company was founded on October 20, 2010 and is headquartered in Edmonton, Canada.

The company’s shares closed last Tuesday at $38.29.