ABC Learning Centres

ABC Learning Centres (ABS) have an upgraded price target of $8.75 from $7 from stock analyst Macquarie Research Equities (MRE). The analyst has noticed how the stock have gained over 46 percent in the last 3 months. ABC Learning have continued on their pattern of acquisitions announcing that they have purchased three childcare centres in the US, UK and NZ: 1) La Petite, comprising 660 centres in the US for US$330m; 2) Busy Bees, comprising 48 centres in the UK for £71m; and 3) Macquarie’s New Zealand childcare business, comprising 55 centres for A$65m. ABC has expanded into the UK with the purchase of Busy Bee, the fifth largest operator in the UK, comprising 33 owned centres, 15 managed and a childcare voucher business. The UK market is three times the size of Australia and it is likely that more acquisitions are being targeted. The UK appears to be a more attractive market from a valuation standpoint, with the first acquisition struck on an EBITDA multiple around 3.5x compared to the US at 7.3x inclusive of synergies and Australia between 6x and 12x. The 12 months share price target was derived by applying a P/E multiple of 20x to ABC's FY08E EPS of 43.7 cents per share. A previous shares recommendation for ABC Learning (ABS).

Macquarie has rated the ABC Learning Centres (ABS) stock as Neutral cutting hteir share price target by 92 cents to $6.81 as a result of the company updating their forecasts after the $600m equity raising and to take recent acquisitions into consideration.

ABC Learning Centres Limited is listed on the Australian Stock Exchange (ASX) under stock code ABS. You can view their investor website here. The company is involved in the provision of formal child care services and education. Check your charts!