Oppenheimer Reiterates Perform Rating on Iron Mountain (IRM)

Oppenheimer is out with a research report this morning, where it reiterates its Perform rating on shares of Iron Mountain Incorporated IRM; they did not provide a price target. The Oppenheimer analysts said, “We recently met with IRM's CEO and CFO to discuss the company's prospects. Though performance has been muted in the current environment, management viewed it as "cyclical vs. secular." With IRM's core storage organic growth historically remaining in the high single digits through the end of 2008 before decelerating, we anticipate storage will "lag" again in a recovery.” “Likely maintaining its 3-5% near term, we estimate storage gradually reaccelerating following a recovery in complementary services (currently benefiting on used paper prices) and (stabilizing) core services. Comfortable with 2Q10E (conservative guidance), we're cautious on 2H10E given tempered certainty of economic acceleration, a fading YTD forex benefit, and tougher used paper price comps. We remain sidelined pending clarity of a sustainable rebound.” They added, “Though still <10% of revenue, IRM continues to position in the digital storage/recovery arena. It anticipates growth via customers opting for opex (outsourced) versus capex (software purchase) when considering digital solutions. IRM's value proposition to customers is supported by its physical/digital hybrid offering.” The Oppenheimer analysts further noted, “We're maintaining our $0.23 2Q10E EPS (-8% y/y) and view $0.25 consensus as achievable, though more so on expense management vs. revenue. We're cautiously maintaining improving q/q performance in 2H10 citing less certainty in progressive economic improvement. Our 2010 rev/adj'd OIBDA/EPS ests remain $3.23B(+7% y/y)/$957M(+10% y/y)/$1.15(+18% y/y), respectively. Our 2011 rev/adj'd $3.43B(+6%)/$1.04B(+9%)/$1.32(+15%).”