MTR recommends IOS convertibles on solid cash flow, balance sheet

By Ronda Fears

Nashville, Tenn., Oct. 8 - Miller Tabak Roberts Securities convertible analyst Robert Wheeler recommended in a report Tuesday buying the convertibles of IOS Capital Inc., the finance unit of independent office equipment dealer IKON Office Solutions Inc.

Wheeler issued a buy recommendation on IOS Capital's 5% convertible notes of 2007 and 9.75% senior notes of 2004 but advised investors to hold IKON's outstanding notes, including the 6.75s of 2004, 7.3s of 2027 and 6.75s of 2025.

"Despite sanguine growth prospects for new copier machine sales over the next six to 12 months and strong competition within both the sales and equipment servicing sectors, we believe that solid cash flows generated by both IKON and IOS Capital will result in the continued strengthening of each of the companies' balance sheets," Wheeler said in the report.

"In particular, we believe that the convertible notes of the financing subsidiary represent a compelling investment at current levels. Our hold recommendation on the parent company's public debt includes our belief that, while credit metrics remain adequate and are expected to improve, we believe IKON's notes are fairly valued at current levels."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.