On Wednesday, BMO Capital Markets adjusted its outlook on Boyd Group Services Inc (BYD (SZ:002594):CN) (OTC: BYDGF), a leading provider of auto body and auto glass repair services. The firm reduced the company's price target from Cdn$330.00 to Cdn$310.00 while maintaining an Outperform rating on the stock.
The revision comes ahead of Boyd Group's first-quarter 2024 earnings report, which is scheduled to be released on May 15, before the market opens. The analyst from BMO Capital anticipates that the company will face similar challenges as it did in the last quarter of 2023, including a decrease in demand and margin pressures due to the opening of new locations.
In light of recent performance indicators from peers in the industry, BMO Capital has also adjusted its same-store sales growth estimate for the first quarter of 2024 to 3%, a decrease from the previously projected 4.5%. This adjustment is seen as a response to the normalization of demand following two years of unusually high activity levels.
Furthermore, the firm has revised its expectations for Boyd Group's EBITDA margin for the years 2024 to 2025 to reflect the potential impact of new service locations on profitability. Despite these challenges, BMO Capital reaffirms its positive stance on the company's underlying business fundamentals.
In their statement, the analyst expressed confidence in the resilience of Boyd Group's business model, suggesting that the core operations remain strong despite the current headwinds. The price target adjustment to Cdn$310.00 is accompanied by an unchanged target multiple of about 13 times.
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