- Truist analyst Stephanie Moore lowered the price target on IAA Inc (NYSE:IAA) to $50 (an upside of 40.5%) from $75 and maintained a Buy rating on the shares.
- The analyst mentioned the company reported a Q4 EBITDA miss and offered "mixed" FY22 guidance on EBITDA margin, but the subsequent 22% stock price decline is "overdone."
- Moore added that IAA is now trading at 11-times expected 2022-2023 EBITDA - its lowest valuation level ever.
- Baird analyst Craig Kennison lowered the price target to $55 from $70 and maintained an Outperform rating on the shares.
- The analyst noted the company reported strong revenue growth driven by solid volume and robust RPU; however, key profit metrics fell just short, and initial 2022 EBITDA guidance also missed the consensus forecast.
- Guggenheim analyst Ali Faghri downgraded IAA to Neutral from Buy.
- Barrington analyst Gary Prestopino downgraded IAA to Market Perform from Outperform without a price target post the Q4 results.
- The company's 2022 guidance is less than consensus, indicating market share losses, increased purchase vehicle mix, and higher expenses, mentions Prestopino.
- The analyst noted previously announced market share shifts should be completed in the first half of 2022 and will reduce total volumes by 2% in 2022.
- He cited the lower than expected guidance driven by organic unit growth headwinds for the downgrade.
- The company reported Q4 Adj. EPS of $0.61 (+27% year-over-year), missing the consensus of $0.62, and Sales growth of 42.9% year-over-year to $548.1 million, beating the conenose of $500.71 million.
- Adjusted EBITDA increased to $140.4 million (+21.1% Y/Y).
- IAA's net debt was $1.24 billion, with a Leverage Ratio at 2.3x and liquidity at $463.8 million as of January 2, 2022.
- Net cash provided by operating activities stood at $311.1 million for FY21, and Free Cash Flow was $175.5 million.
- The company repurchased $34 million of stock during Q4, with $366 million remaining on the authorization.
- FY22 Outlook: IAA expects total revenue of $2.05 billion - $2.15 billion, versus the consensus of $1.96 billion.
- It expects adjusted EBITDA of $525 million - $575 million.
- Price Action: IAA shares are trading lower by 0.13% at $35.63 on the last check Monday.
