On Dec 13, 2013, Zacks Investment Research downgraded
Iron Mountain (
to a Zacks Rank #5 (Strong Sell).
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Why the Downgrade?
Iron Mountain's not-so-impressive third-quarter results, lowered
outlook and uncertainty related to granting of the REIT status
were the primary reasons behind the downgrade.
Although the company's adjusted earnings of 31 cents per share
succeeded in beating the Zacks Consensus Estimate by a penny,
revenues missed the consensus mark.
Revenues declined marginally (down 1.4%) from the year-ago
quarter to $755.6 million. The decline resulted from lower
storage rental revenues (down 2.4% year over year), which was
offset to a certain extent by a 1.0% year-over-year increase in
Adjusted OIBDA margin contracted 80 basis points (bps) on a
year-over-year basis to 31.8% due to legal accruals and decline
in revenues in the Service segment.
The lackluster result compelled Iron Mountain to revise the
full-year 2013 revenue guidance range from $3.00 billion-$3.05
billion to $3.025 billion-$3.050 billion. Currently, the Zacks
Consensus Estimate is pegged at $3.035 billion.
Management also revised down its adjusted OIBDA guidance from the
earlier outlook of $900.0 million-$925.0 million to $905.0
million-$925.0 million. Iron Mountain now expects earnings in the
range of $1.05-$1.14 per share for the full year.
Although the company's decision to convert to REIT to reduce the
tax burden and increase shareholders' value are positives, costs
related to conversion and fluctuations in recycled paper prices
are major near-term headwinds.
The Zacks Consensus Estimate for the fourth quarter of 2013 has
declined 15.4% (4 cents) to 22 cents over the last 60 days.
The Zacks Consensus Estimate for 2013 decreased 1.8% (2 cents) to
$1.09 per share over the last 60 days and that for 2014 dropped
14.1% (18 cents) to $1.10 over the same period.
Other Stocks to Consider
Some better-ranked stocks in the technology sector include
Netflix Inc. (
AOL Inc. (
. While Netflix and AOL carry a Zacks Rank #1 (Strong Buy),
Facebook holds a Zacks Rank #2 (Buy).