MEG - Montrose Environmental -26% in two days after Q4 miss JPM downgrade

Montrose Environmental ( NYSE: MEG ) -16.5% Thursday and 26% lower in the two trading sessions since reporting lower than expected Q4 adjusted earnings and guiding for below-consensus adjusted EBITDA for 2023.

Q4 net loss widened to $10.8M, or a loss of $0.50/share, from a year-earlier net loss of $1.5M, or a loss of $0.19/share, while Q4 revenues fell 3% Y/Y to $139.5M, primarily due to lower demand for COVID-19 related services provided by its CTEH emergency response business.

Montrose ( MEG ) issued FY 2023 guidance for adjusted EBITDA of $68M-$74M, below $80.9M analyst consensus estimates, and revenues of $550M-$600M, in line with $586M consensus.

In reaction to the disappointing results, J.P. Morgan downgraded Montrose ( MEG ) to Neutral from Overweight with a $39 price target, cut from $48, saying long-term growth prospects remain promising but with a "bumpy" glide path in the nearer term.

While Montrose ( MEG ) "can grow at a decently high level organically, when excluding the more volatile CTEH, and acquisitions will also bolster top line growth, the company's operating leverage in the near term appears muted," JPM analyst Stephanie Yee wrote.

Montrose Environmental ( MEG ) shares have lost nearly 20% so far this year and nearly 11% during the past 12 months .

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