We are downgrading Iron Mountain Incorporated (IRM) to Neutral from Outperform with a lower six-month price target of $26.00, as we don’t see any near-term drivers of growth. Our price target represents a 2010 P/E multiple of 24.3x, a premium to the industry average. We currently do not see much upside to the shares from current [...]

(IRM) Iron Mountain Incorporated Downgraded

We are downgrading Iron Mountain Incorporated (IRM) to Neutral from Outperform with a lower six-month price target of $26.00, as we don’t see any near-term drivers of growth. Our price target represents a 2010 P/E multiple of 24.3x, a premium to the industry average.

We currently do not see much upside to the shares from current levels due to softness in Services revenue (approximately 46% of total revenue), driven by the weak economy. We believe the stock is over-priced and near-term momentum is not envisioned.

As long as the company continues to perform at a high level, we believe the shares can maintain their current valuation, and perhaps increase slightly, but we would not chase the stock at these levels.

The company’s third quarter results were in line with Zacks Consensus Estimates. However, IRM narrowed the guidance range for 2009. It has also adopted an aggressive acquisition strategy to stimulate internal growth, especially in storage revenue. The company has also built a strong platform for future growth.

The continuing strength in the information protection and storage business has driven steady profits for IRM. With focused execution, substantial recurring revenue, steady margins, earnings momentum, cost savings, international expansion and proven value proposition, we remain optimistic on the company’s long-term prospects.

Despite these positives, we would like to caution investors about the high level of debt, the high valuation and dependence on large acquisitions for growth. Moreover, softness in the Services business, strong competition and foreign currency fluctuations are other negatives.

Although Iron Mountain has a strong product and market position, the company is still small relative to competitors such as Equifax (EFX), R.R. Donnelley & Sons (RRD), Dun & Bradstreet Corp. (DNB) and Hewitt Associates, Inc. (HEW).

Shares of Iron Mountain are currently trading at a P/E multiple of 22.9x our 2010 earnings estimate of $1.07, a premium to the industry average and the S&P 500. Over the last five years, Iron Mountain’s shares have traded in a range of 25.1X to 50.8X trailing 12-month earnings.
Read the full analyst report on "IRM"
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Read the full analyst report on "DNB"
Read the full analyst report on "HEW"
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For Immediate Release

Chicago, IL – November 2, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Dun & Bradstreet Corp. (DNB), R.R. Donnelley & Sons (RRD), Iron Mountain (IRM), Experian (EXPGY) and Equifax (EFX).

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Here are highlights from Friday’s AnalystBlog:

Dun & Bradstreet Beats, Reaffirms

Dun & Bradstreet Corp. (DNB), a well-known provider of business information, reported fiscal third-quarter earnings before non-core gains and one-time charges of $1.13 per share, beating the Zacks Consensus Estimate by a penny. EPS results increased one cent from the year-ago profit of $1.12 per share.

Meanwhile, core revenues (excluding revenues of $10.2 million in the year-ago period associated with the domestic portion of Italian operations which have been divested) were $399 million in the quarter, flat with the year-ago period. Revenues were slightly above the Zacks Consensus estimate of $396.2 million. Including the impact of the divested business and the unfavorable impact of foreign exchange, total revenue decreased 2.5% to $399 million.

Core revenues were positively impacted by Sales & Marketing Solutions revenues (26.5% of total core revenue), which were up 2% year over year to $105.9 million, offset by flat revenues from Risk Management Solutions (66% of total core revenue) to $264.8 million, and a decrease of 9% in Internet Solutions revenue (7.5% of total core revenue) to $28.3 million, after the effect of foreign exchange.

Quarterly results were in line with management’s expectation due to the strong performance of the International segment. Core revenues in the International segment increased 13% year over year to $88.2 million after the foreign exchange impact.

However, the fall in North America sales led to a decrease in revenue. Core revenues from the segment fell 3% year over year to $310.8 million after the foreign exchange impact. However, it was in line with the company’s expectation.

Operating income before non-core gains and charges fell 3% to $104.8 million from the prior year. During the current quarter, the company also incurred transition costs of $4 million, which hurt the margin.

The company aims to invest only in high margin businesses, while divesting the less profitable ones. We remain positive on its growing customer relationship and customer renewal rates. Around 64% of North America risk management customers renewed their subscriptions in the current quarter.

While, Dun & Bradstreet faces competition from R.R. Donnelley & Sons (RRD), Iron Mountain (IRM), Experian (EXPGY) and Equifax (EFX), DNB's competitive position remains strong.

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Zacks Investment Research

Dun & Bradstreet Corp. (DNB), a well-known provider of business information, reported fiscal third-quarter earnings before non-core gains and one-time charges of $1.13 per share, beating the Zacks Consensus Estimate by a penny. EPS results increased one cent from the year-ago profit of $1.12 per share. Meanwhile, core revenues (excluding revenues of $10.2 million in the year-ago period [...]

(DNB) Dun & Bradstreet Beats Estimates – Reaffirms Outlook