09:36 AM EDT, 06/24/2024 (MT Newswires) -- Stifel GMP on Monday reiterated its buy rating on the shares of K-Bro Linen ( KBRLF ) and its C$45.00 price target after the company last week closed a small acquisition of a Montreal rival.

"K-Bro announced the acquisition of Buanderie C.M., a healthcare laundry and linen operator in North Montreal, for $12mm at 1.6x sales. The asset is expected to be accretive and follows ~C$64.2mm deployed since 2023 (table below). This tuck-in acquisition will add $7.3mm in annual revenue and allow KBL to further expand in Quebec, with two facilities in Montreal to service its healthcare and hospitality business. K-Bro will finance the transaction entirely from its C$175mm credit facility at a rate of prime +0.25 to 1.75%, depending on leverage. Post-transaction, we estimate there is ~C$53mm of capacity remaining on the facility to deploy, and the business to be at ~2.4x proforma net debt/LTM EBITDA with comfort up to 3x. * KBL trades at 6.8x NTM EBITDA with a 3.9% yield," analyst Justin Keywood noted.

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