On Wednesday, a controversial form 4 was filed with the SEC for global business records provider Iron Mountain (US:IRM) regarding the sale of shares by the groups CEO, William Meaney.
In the filing, Meaney disclosed the sale of 10,509 shares at $46.20 per share which took place on Tuesday. The estimated value of the transaction was around ~$485 thousand.
The shares were part of the CEO’s employee stock options plan which gave Meaney the right to buy shares at $31.00, as approved in the management trading plan on the 20th of May 2022.
Following the transaction, Meaney now owns 295,650 shares in Iron Mountain which has a market value just shy of $14 million.
The exercising and selling of shares as part of a trading plan is usually a routine action by senior management of listed corporations, however this instance has not been the case.
In an article first seen in the New York Post last week claimed that CEO William Meaney during an investor event on the 20th of September told sell side analysts on Wall Street that he had been “doing my inflation dance praying for inflation”.
Meaney explained to analysts that raising prices covers the businesses operating costs and that most of the increases actually flow through to bottom line profits.
The CEO boasted how while inflation had been growing at an extraordinary pace, Iron Mountain was able to price ahead of the consumer price index (CPI).
Meaney agreed that trailwinds that benefitted Iron Mountain were usually bad for the general public.
So why would the CEO be selling stock at a time when his company is likely to outperform the broader market?
At the investor update on the 20th of September, Iron Mountain management in a presentation to investors reiterated 2022 guidance while introducing 5-year medium term targets for 2026.
While the 2022 guidance was broadly expected as it has been previously communicated to the market, the 2026 targets were new metrics for analysts to include in their future modelling.
The growth is expected to come from a new initiative called “Project Matterhorn” which would see the company shift from a product to solution sales model through a new global enterprise-wide commercial platform. The project will require an estimated ~16% of revenue (about $4 billion) over the next four years to achieve .
Over the next 5-years, management plans to grow revenue by around ~10% per anum to $7.3 billion by 2026 with adjusted EBITDA following similar trends to achieve ~$2.5 billion in pre-tax profit by the date.
The company expects to grow adjusted funds from operations (AFFO) by around ~8% per anum to $1.5 billion by 2026.
Analyst Steve Sakwa from Evercore ISI believes the investor day was positive with the company focusing on new initiatives to drive value-add services to their existing customer base.
Sakwa believes that risk around the plan is reduced as it does not require equity issuance in a market that remains volatile. Evercore remains ‘outperform’ rated on the stock with a $63 target.
From a different perspective, Shlomo Rosenbaum from Stifel Nicolaus believes investors were spooked by the $4 billion in required capex over the next four years, resulting in the stock losing slipping -9.8% on the day.
Rosenbaum thinks investors will be cautious on management’s ability to avoid raising equity while increasing the dividend at the same time throughout the period. Stifel retained their ‘buy’ call on the stock, following the update.
Overall, IRM has a consensus ‘overweight’ rating with a $55 average target.
This article originally appeared on Fintel
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