Service Corp International (SCI)

Consumer Discretionary

MYST Advisors

Misperception around the extent to which SCI continues to benefit from the pull-forward of excess deaths due to Covid - management is guiding to a MSD % decline in deaths for FY23, but the Presenter of this short pitch (at MYST's Bear's Den Idea Forum) suggests a 15-20% drop is more likely. Even more troublesome, imminent new regulatory reforms are expected to create significant long-term headwinds for SCI and the industry overall. In 2018, when UK Regulators forced funeral homes to fully disclose pricing, the stocks subsequently declined more than 50% as margins were impacted meaningfully. Forecasts FY24 EPS of $2.00 (vs. consensus $3.88). TP $40 (40% downside).

- 14 April, 2023