CR - Crane Holdings downgraded to Neutral at UBS on breakup doubts

2023-03-24 09:24:43 ET

Crane Holdings ( NYSE: CR ) on Friday was downgraded to Neutral from an investment rating of Buy by analysts at UBS. They said the industrial products company faces possible difficulties in spinning off its payments business into a separate publicly traded company called Crane NXT.

“The path to unlocking further shareholder value is likely bumpier and slower in the near term,” Damian Karas, analyst at UBS, said in a March 24 report. “Also, we see a risk of relatively subdued early standalone valuation for NXT (due to lack of clear comps and target investors), potentially leading to a more attractive entry point post-separation.”

UBS cut its price target for Crane ( CR ) to $120 a share from $132 a share. The bank’s sum-of-the-parts valuation has a target price on Crane ( CR ) of $69 a share based on a lower EBITDA multiple of about 11 times, down from approximately 12 times previously.

The target for Crane NXT is $51 a share, based on a lower EBITDA multiple of about 8 times, down from approximately 9 times earlier, according to UBS.

“Management is keen to acquire, but we think its ability to do aero deals could be constrained by Crane’s ( CR ) valuation and smaller size relative to other aerospace and defense players,” UBS said. “Still, most investors would likely view shares at 10 times EBITDA or less as an attractive buying opportunity.”

For further details see: