Imperial Downgrades Brink's, Lowers Revenue Forecasts After Meetings With Management

In a report published Wednesday, analysts at Imperial Capital downgraded Brink's Company (NYSE: BCO) from Outperform to In-Line. The price target was maintained at $30. While the company's restructuring plan has begun to bear fruit, currency headwinds continue.

The management's restructuring plan has finally begun to show positive results, mostly in the U.S. and Mexico. However, the strong U.S. dollar continues to lead to FX headwinds for the company. This, along with the exclusion of Brink's Venezuelan operations from the company's results, has led the analysts to lower their revenue and EBITDA estimates for the company for FY15. The FY16 and FY17 revenue, EPS and EBITDA estimates have also been lowered.

On May 4, Starboard Value LP disclosed that it has purchased an 8.2 percent stake in Brink's. The analysts believe that "Starboard is more likely to play a passive role at first in working with the management team of Brink's. This, in our opinion, could change if the company does not execute on its multi-year business plan."

Imperial Capital expects the company to be able to post a recovery in its North American operating margins over the next two years if it undertakes cost cuts, increases performing U.S. branches, gets better results from the U.S. management team and takes on a revenue mix shift to higher margin services.

"Going forward, we hope to have greater confidence that the Mexico business will complete its restructuring and reach or exceed the 10% margins that the company is targeting over the next two years," the analysts added.