Mobile Mini Inc.'s shares gained in Monday trading after a KeyBanc Capital Markets analyst upgraded his rating on the stock, saying he sees a recovery ahead for the portable storage container company.
THE SPARK: Analyst Joe Box said in a research note that the departure of the company's CEO and its most recently quarterly results are indicative of a major change in strategy. Stating he now believes the company is in the early stages of recovery, Box upgraded his rating to "Buy" from "Hold" and introduced a $28 price target.
THE BIG PICTURE: Over the past five months, Mobile Mini has announced the exit of its CEO, scaled back or canceled a number of costly investments and appears to be more focused on its core storage business, which could help its future financial performance. The company provides steel storage containers, shipping containers and mobile offices in three Canadian provinces, 48 states and Washington, DC.
THE ANALYSIS: The analyst said the company's new strategy to focus on its base industrial business rather than an expensive ancillary consumer business, while controlling costs is enough to offset some of his concerns about the company. Additionally, he expects its cash flow will improve, allowing it to pay down its debt.
Box said that Mobile Mini's third-quarter results, reported in November, reflect some of these recent changes, as its margin on earnings before income taxes, debt and appreciation improved for the first time since 2009.
SHARE ACTION: Shares jumped 90 cents, or 4.4 percent, to $21.56 in afternoon trading.
The stock price had fallen fairly steadily since early 2012 until a recovery kicked in this summer. Shares are at the upper-end of its 52-week trading range of $12.60 to $23.08.