Atmus Filtration rises; JPM starts at "overweight" after IPO quiet period ends
20/06/2023 13:29
** Atmus Filtration Technologies Inc's ATMU.N stock up 3%
at $20.10 premarket as JP Morgan initiates coverage with
"overweight" rating following co's debut last month
** IPO for engine filtration unit of Cummins Inc CMI.N
priced at $19.50, valuing Atmus at ~$1.6 bln
** JPM, one of the lead bookrunners on the IPO, sets ATMU PT
at $28, implying ~43% upside to stock's Fri close
** ATMU has potential to accelerate growth through expansion
in core and near-adjacent categories, while steady cash flows
and a solid balance sheet should allow co to enter broader
industrial filtration market through M&A, JPM says
** Brokerage also points to "deep discounted" valuation with
ATMU's shares currently trading at ~8x EV/EBITDA on its 2023
estimates, citing primary peers Donaldson Company Inc DCI.N
and Parker-Hannifin Corp PH.N trading at avg of ~13x
** Analysts, however, also cite customer concentration risk
for ATMU with CUM, Paccar Inc PCAR.O and Traton SE 8TRA.DE
accounting for nearly half of FY22 sales
(Lance Tupper is a Reuters market analyst. The views expressed
are his own)
((lance.tupper@thomsonreuters.com
lance.tupper@tr.com 1-646-279-6380))