CFRA Sticks With Hold Rating On Arconic, Citing Uncertainty About CEO Search, Grenfell Tower Liability

CFRA said Monday it is sticking with a hold recommendation on shares of Arconic Inc. , after the spinoff from Alcoa Inc. reported second-quarter earnings. Analyst Matthew Miller said his 12-month price target of $27 implies an EV/EBITDA multiple of 9.0 times his 2017 EBITDA view, a discount to peers that trade at an average forward EV/EBITDA of 9.3 times. The target "is justified by uncertainty regarding the ongoing CEO search and the potential liability from the cladding used on the Grenfell Tower," Miller wrote in a note. Arconic said earlier it had no control over the aluminum panels used in the exterior of the London tower, that are believed to have ignited during a fire in June that killed at least 80 people. The company had already said it will stop selling the panels for use in high-rise buildings. Miller said he is trimming his 2017 EPS estimate by 3 cents and his 2018 EPS estimate by 5 cents. Shares were down 0.7% in late trade, while the S&P 500 was down 0.1%.