Morgan Keegan Sees Little Upside In VCA Antech (WOOF)

Morgan Keegan sees little upside in shares of VCA Antech WOOF after meeting with management. It rates shares at Hold, and has a $20.75 price target on VCA Antech. In the research report, Morgan Keegan notes, "We visited institutional investors with VCA Antech management. The company has experienced margin compression to date in 2010, with the year-to-date EBITDA margin of 21.2% representing a 185 basis point decline from 2009. Continued volume weakness that we link to the economy has adversely affected revenues and margins as the company's cost containment efforts are bumping up against fixed costs. Management believes that flagging consumer confidence affects its veterinarians as well as consumers. Veterinarians are reluctant to recommend additional services to their clients. This limits internal growth prospects, though the company reports an improved acquisition environment that could help boost external growth. Our view of VCA Antech remains that prospects for same-store growth, and therefore earnings growth, are limited until consumer confidence rebounds." Shares of VCA Antech lost 55 cents yesterday to close at $19.27.