Matthews International Shares Present 17% Upside, Buckingham Says In Bullish Initiation

Matthews International Corp (NASDAQ: MATW), which provides brand solutions, memorialization products and industrial products, represents an attractive investment opportunity according to Buckingham Research Group.

The Analyst

James Clement initiated coverage of shares with a Buy rating and a $61 price target.

The Thesis

Matthews International’s Brand Solutions business should get better going forward, shaking off the impact of zero-based budgeting, SKU rationalization on grocery store shelves, and a timing distortion created by new nutrition disclosure guidelines form the Obama administration, Clement said in a Tuesday note.

The analyst views the Memorialization business to be cyclically-resistant and competitively protected. The death-care services industry, according to the analyst, is heavily consolidated, with Matthews International and Hillenbrand, Inc. (NYSE: HI) almost holding duopolistic position in the industry.

Clement said, notwithstanding muted organic top-line growth in the segment, margins are healthy due to a healthy degree of pricing power.

With Matthews International, Buckingham said investors are getting a free call option on its Industrial Technologies business. By 2020, the firm said revenue from this segment would increase up to 13 percent.

“The EBITDA margin should approach 17% and, over time, should comfortably exceed 20%, in our opinion,” the firm added.

Price Action

At time of writing, shares of Matthews International traded around $49.26.

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