Following second quarter results he described as “strong”, Roth MKM analyst Matt Koranda has maintained his “Buy” rating on Motorcar Parts of America (Motorcar Parts of America Stock Quote, Chart, News, Analysts, Financials, Nasdaq, MPAA).
On November 9, MPAA reported its Q2,2024 results. The company posted a net loss of $2.0-million on net sales of $196.6-million, up 14.0 per cent from the same period a year prior.
“Demand for critical non-discretionary automotive parts is strong and we remain focused on leveraging our leadership position. As sales volume increases, particularly within certain of our emerging brake-related product categories, we expect to realize even further improvement in operational efficiencies. We remain optimistic about achieving our year-over-year financial targets and look forward to a strong second half,” CEO Selwyn Joffe said.
Koranda summarized the quarter.
“Motorcar delivered a strong 2FQ, highlighted by +14% YoY growth, ~500bps of adjusted GM expansion, and operating leverage, resulting in >600bps of adj EBITDA margin expansion, and a ~40% beat vs. our expectations,” he said. “Management reiterated F2024 guidance, which makes 2FH look quite beatable. We still think demonstrating steady FCF will be the key ingredient to get the stock to work. On that front, MPA produced $15mn in FCF, and noted more WC flush ahead, which bodes well for sustained F2024 FCF.”
In a research update to clients November 13, the analyst maintained his “Buy” rating and one-year price target of $12.00 on MPAA.
Koranda thinks MPAA will post EBITDA of $94.9-million on revenue of $739.1-million in fiscal 2024. He expects those numbers will improve to EBITDA of $108.4-million on a topline of $813.0-million in fiscal 2025.
“Our F2024 and F2025 estimates head higher, largely driven by the strong 2FQ beat, offset by some more conservatism in 2FH24 (reiterated F2024 guidance means we need to trim 2FH to stay inline with the top end of the guidance range),” he concluded.
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