The RMR Group Inc Receives a Buy from Canaccord Genuity

By Carrie Williams

Canaccord Genuity analyst Michael Kodesch reiterated a Buy rating on The RMR Group Inc (NASDAQ: RMR) today and set a price target of $72. The company’s shares opened today at $47.75.

Kodesch wrote:

“We are initiating on RMR Group with a BUY rating and $72 price target. Given outsized operating leverage, the key to success as an asset manager is to grow AUM, generate performance fees, or some combination of both. Our BUY rating is not just predicated on our belief that RMR can deliver both, but additionally we believe the Street is materially underestimating potential incentive fees in 2018 and 2019. From a growth perspective, we still see pockets of acquisition opportunities across the REIT space and believe the managed REITs have plenty of debt capacity to grow the AUM base without weighing on REIT stock performance and thus no drag on incentive payments. Finally, as RMR’s operating margins are best-in-class among asset manager peers, we believe this should translate to relatively sharper growth on the bottom line. Our BUY rating is driven by: Incentive fees materially under-estimated by sell-side. We estimate that 1Q18 and 1Q19 incentive payments will be well above the Street’s expectations based on where the REITs are trading. Our calculation of $149M in 1Q18 leads our 2018 EPS to be 75% above consensus. At the current consensus 2018 PE multiple of 17.1x, we estimate the difference in incentive revenues represents $35.27 upside to the stock price, all else equal.”

According to TipRanks.com, Kodesch is a 3-star analyst with an average return of 5.4% and a 64.3% success rate. Kodesch covers the Financial sector, focusing on stocks such as Apartment Investment & Management, Preferred Apartment Communities, and NexPoint Residential Trust Inc.

The RMR Group Inc has an analyst consensus of Moderate Buy, with a price target consensus of $60.

Based on The RMR Group Inc’s latest earnings report for the quarter ending March 31, the company posted quarterly revenue of $56.65 million and quarterly net profit of $6.87 million. In comparison, last year the company earned revenue of $50.69 million and had a net profit of $6.11 million.

TipRanks has tracked 36,000 company insiders and found that a few of them are better than others when it comes to timing their transactions. See which 3 stocks are most likely to make moves following their insider activities.

RMR Group, Inc. is an alternative asset management company which invests in real estate and involved in the management of real estate related businesses. It primarily provides management services to publicly owned real estate investment trust, real estate operating companies. The company was founded on May 28, 2015 and is headquartered in Newton, MA. .