William Blair initiated research coverage of APi Group Corporation (APG $37.65), the global leader in life safety services, with a total addressable market that is estimated to exceed $150 billion.
Analyst Tim Mulrooney estimated that the company would generate earnings per share of $1.77 in 2024, $2.02 in 2025, and $2.48 in 2026.
“APi’s ‘inspection first’ strategy is differentiated from many ‘installation first’ competitors,” Mulrooney said. “Inspections are often required by laws or insurance mandates to be performed at regular intervals, which provides a strong recurring revenue stream at higher margins than installation work. As technology improves, we expect fire marshals and insurance companies to become more proficient from an enforcement perspective, holding companies and institutions accountable for safety deficiencies. We expect APi’s strategy will drive EBITDA margins above 13% in 2025 and potentially above 15% several years thereafter as recurring services continue to form a larger proportion of the overall revenue mix.”
Mulrooney continued, “APi operates in the highly fragmented fire and life safety market, with single-digit market share today and a pipeline of more than 300 acquisition targets, 90% of which are generated through proprietary channels. In addition, we see the opportunity to expand further into adjacent markets with statutorily required services, such as security and elevator services. For example, earlier this year the company acquired Elevated for $580 million, with annualized revenues of $220 million and 20% EBITDA margin. The goal is to grow this adjacent market both organically and inorganically to $1 billion in annual revenue over time.”
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