Onex share price attractive long-term
RBC Capital Markets lowered its price target on Onex Corp. on Wednesday, but said the stock has become an attractive option for long-term investors.
The Toronto-based private-equity firm has long been a popular stock with investors looking to time the market. But RBC said the company’s strong growth in the past few years means a longer-term view has taken hold.
“We think investors looking longer-term may find the current share price attractive given an 11% implied total return to our 12-month target, plus exposure to Onex’(s) long-term investment track record that historically translated into strong NAV growth for shareholders,” analyst Geoffrey Kwan said in a note to clients.
Kwan currently rates Onex as sector perform, with a 12-month price target of $78, down from $80 previously. It closed Wednesday at $68.93.
The analyst notes that Onex’s stock has been less volatile in recent years, with more investors looking to capitalize on the company’s strong track record of increasing its net asset value. In the past, many would buy the stock whenever Onex moved to monetize its assets, and then sell shares to profit from any price gains.
Kwan said more long-term investors, combined with Onex’s large cash pile, which supports buybacks, means that the company has become more of a “defensive” play in portfolios.
“Onex has attractive value for long-term investors looking for exposure to a private equity firm with a strong long-term investment track record,” Kwan said. “We believe that as Onex invests its high cash levels into new investments, this should help significantly improve NAV growth and benefit Onex’s share price over time.”