Scotts Miracle-Gro stock price target cut to $85 from $95 at J.P. Morgan
Scotts Miracle-Gro stock price target cut to $85 from $95 at J.P. Morgan
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Scotts Miracle-Gro stock price target cut to $85 from $95 at J.P. Morgan
Scotts Miracle-Gro downgraded to underweight from neutral at J.P. Morgan
Scotts Miracle-Gro upgraded to buy from hold at SunTrust RH
Scotts Miracle-Gro Co. shares are down 2.2% in Wednesday trading after the lawn and garden company announced an agreement to acquire Sunlight Supply Inc., a hydroponics distributor, for $425 million in cash and $25 million in Scotts Miracle-Gro equity upon completion of the deal. The deal will create a distribution model for The Hawthorne Gardening Co., a wholly-owned subsidiary of Scotts Miracle-Gro. Hawthorne had 2017 sales of about $290 million and has a portfolio of brands that includes Gavita and Botanicare. Sunlight has a 350,000-square-foot distribution center in Vancouver, Wa. along with three other North American facilities. Hawthorne Gardening and Sunlight Supply are expected to have about $600 million in annualized sales. In fiscal 2018, the deal is expected to be dilutive by 30 cents to 40 cents per share on an adjusted basis. The company expects to achieve $35 million in financial synergies by the end of fiscal 2019 and incur about $15 million to $20 million in restructuring charges to achieve the synergies. Benefits are expected to improve year-over-year by 60 cents to 80 cents per share on an adjusted basis in fiscal 2019. Scotts Miracle-Gro will announce fiscal second quarter results on May 1. "Strategically, we like the transaction as it fits extremely well with Scotts Miracle-Gro's Hawthorne hydroponics subsidiary," Raymond James analysts wrote in a note. "As with its core U.S. Consumer business, the new vertically-integrated operating model is likely to bring Hawthorne closer to its retailer customers and improve its visibility, while also yielding cost synergies which Scotts Miracle-Gro estimates at $35M by FY19." Raymond James rates Scotts Miracle-Gro market perform. Scotts Miracle-Gro shares are down 22.2% for the year so far while the S&P 500 index is up 1.3% for the period.
Scotts Miracle-Gro Co. announced plans late Tuesday to acquire Sunlight Supply Inc., a hydroponics supplier, for $450 million in cash and stock. Sunlight Supply logged fiscal 2017 sales of $460 million and earnings before interest, taxes, depreciation and amortization of $55 million, Scotts said. Scotts Miracle-Gro has significant exposure to the cannabis industry, as several of its products are used by marijuana cultivators. Hydroponics equipment, similar to what Sunlight Supply makes, also can be used by cannabis companies to grow the plant. Combined with Scotts' hydroponics unit Hawthorne Gardening, the new unit will have a total of $600 million in annual sales, Scotts said. "Combining Hawthorne's industry-leading product portfolio with Sunlight's unparalleled distribution capabilities and complementary portfolio will benefit consumers and all stakeholders in the hydroponic marketplace," said Scotts Chief Executive Jim Hagedorn. Scotts stock is flat after hours and closed up 1.4% to $85.14 during Tuesday's regular session. The law and garden-care company's stock has fallen 20% this year, as the S&P 500 index has gained a fraction.
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Scotts Miracle-Gro Co. engages in the manufacturing, marketing, and sale of consumer branded products for lawn and garden care. It operates through the following segments: U.S. Consumer, Hawthorne, and Other. The U.S. Consumer segment offers consumer lawn and garden business in the United States. The Hawthorn segment consists of indoor, urban and hydroponic gardening business. The Other segment provides consumer lawn and garden business in the U.S. and Europe. The company was founded by Orlando McLean Scott in 1868 and is headquartered in Marysville, OH. (See Full Profile)
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