A&B high on $71 million buyback of stock
By Andrew Gomes
Advertiser Staff Writer
Alexander & Baldwin Inc. said its $71.5 million stock buyback last week was a good investment for the company, which cited analyst reports that view A&B stock as undervalued.
A&B shares received an initial boost when the buyback was announced July 10, rising 28 cents a share to close at $43.06 that day. Since then, however, A&B shares have fallen 4 percent, closing yesterday at $41.34.
Analysts have been mostly positive in their outlook for A&B stock, with three top-tier investment banks predicting modest appreciation in the share price, and one firm concluding that the shares were above their fair value.
Three Wall Street firms between May 9 and July 6 issued value targets for A&B stock between $51 and $64 a share:
Caris & Co. broke from the pack, issuing a June report that said a fair value for A&B stock was about $38 per share, or several dollars below the $41 to $47 range at which A&B repurchased roughly 1.7 million shares.
Caris & Co. cited factors including a softening housing market and volatile fuel prices that it believes increase risks for A&B's biggest areas of business — real estate development and ocean transportation.
Another firm, Matrix USA, upgraded its recommendation for A&B stock on June 26 to a "buy" rating, which was up from a "hold" rating. The hold rating, issued May 18, was a downgrade from a "strong buy" rating in March, according to Bloomberg.
Investors over the past three months have traded A&B stock between $41 and $46. The stock reached a 52-week high of $55.40 in December. The 52-week low was $41.15 on June 26.
Allen Doane, A&B chairman and CEO, said the buyback was an attractive investment made in response to the recent softness in the company's stock price.
Reach Andrew Gomes at agomes@honoluluadvertiser.com.
