ADT performing well

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01/16/2013

Since ADT spun off from Tyco International Sept. 28 and began trading on the New York Stock Exchange, the news about its performance has been upbeat. And earlier this week, according to news reports, Credit Suisse Group reaffirmed its outperform rating of the The ADT Corp. and raised its target price from $50 to $54. It cited ADT mergers and acquisitions as a factor.

Here’s more from Credit Suisse’s Jan. 14 assessment of ADT:
 

Some investors think they "missed" the chance to own ADT. We disagree, and see upside to the mid/high $50's over the next 12 months. TP raised to $54 (from $50). We think ADT's M&A spend will exceed their budgeted $150mn in 2013 and drive revenue and earnings growth above current market expectations. The fragmented security monitoring industry is filled with potential targets for ADT and given most industry competitors operate near identical business models, most M&A should offer significant cost synergies and earnings accretion. An additional half turn of EBITDA leverage to ADT's current targets would give ADT $700mn to spend on M&A; this could mean $175m in incremental EBITDA before synergies (10%+ accretive).

In trading yesterday, ADT closed at $47.25. Its 52-week range went from $35.38 to $47.50.

 

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