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Vectrus (VEC) – A Deeper Dive: Why We Believe the Vectrus/Vertex Combination is a Winner

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Monday, March 14, 2022

Vectrus (VEC)
A Deeper Dive: Why We Believe the Vectrus/Vertex Combination is a Winner

Vectrus Inc is a U.S.-based company that provides services to the U.S. government. It operates as one segment and offer facility and logistics services and information technology and network communications services. The information technology and network communications capabilities consist of communications systems operations and maintenance, management and service support, systems installation and activation, system-of-systems engineering and software development, and mission support for the department of defense. The facility and logistics service include airfield management, ammunition management, civil engineering, communications, emergency services, life support activities, public works, security, transportation operations and others.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

    Price Decline is Not Supported. VEC shares continued to drop, closing on Friday at $34.48, now down $11.81, or 25.5% from the March 4th closing price, prior to the Vertex deal being announced Monday the 7th before the market opened. The sell off is unwarranted in our view. As we mentioned in our March 10th report, we believe the Vertex acquisition to be transformative, creating a global leader in mission-essential solutions. With the acquisition, the combined entity will play in an even larger pool with market trends supporting growth in the converged infrastructure market. We are maintaining our Outperform rating and $62 twelve month price target on VEC shares.

    Valuation.  While we acknowledge no two acquisitions are alike, the 9.5x adjusted EBITDA multiple being paid is not out of line. In 2019 AECOM sold its Management Services unit, which provides logistics and technical assistance to the government, for 11.6x. And the median EV/EBITDA multiple for the Aerospace and Defense industry is approximately 14x …


This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

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