Custom Truck Acquires HiRail; Analysts Remain Bullish

Custom Truck One Source, Inc. (NYSE: CTOS) revealed that it has completed the acquisition of HiRail Leasing, Northshore Rail Contracting and Heavy Equipment Repairs, or HiRail Leasing Group, for $46 million.

HiRail has over 600 rental units in Ontario and Alberta. It engages in a diverse rental fleet, including light, medium and heavy-duty trucks fitted with a wide array of attachments. The company has served Canada’s leading railways and rail contractors.

The acquisition, which is expected to be immediately accretive to earnings, has been financed with cash in hand, along with drawings on Custom Truck’s existing credit facility.

The CEO of Custom Truck, Fred Ross, said, “This acquisition allows us to accelerate growth in our core rental business. We will leverage our one stop shop capabilities in rental, sales, equipment upfitting, and service to meet the critical equipment needs of new and existing customers across Canada.”

Stock Rating

Last week, Robert W. Baird analyst Justin Hauke initiated coverage on Custom Truck with a Buy rating and price target of $11 (41% upside potential from current levels).

Hauke noted, “The company’s national footprint, established supply chain, long-term customer relationships, and integrated financing, support, and parts/service offering combine to provide a “one-stop shop” for customers’ specialty equipment needs, unique in the industry.”

Consensus among analysts is a Strong Buy based on 4 unanimous Buys. The average Custom Truck price target stands at $57.50 and implies upside potential of 68.1% to current levels.

Positive Sentiments

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Custom Truck, with 144.4% of investors increasing their exposure to CTOS stock over the past 30 days.

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