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KeyBanc Upgrades DineEquity (DIN) to Buy; Number of Catalysts Including Dividend Hike

February 7, 2014 6:56 AM EST Send to a Friend
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Price: $83.45 --0%

Rating Summary:
    5 Buy, 5 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 2 | Down: 3 | New: 7
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KeyBanc upgraded DineEquity (NYSE: DIN) from Hold to Buy with a price target of $90.00.

"DIN shares have pulled back in recent weeks, along with most restaurant stocks, over well-known concerns about consumer spending during December and January. We believe this pullback will prove temporary as several catalysts are in place to drive share appreciation," analyst Christopher O'Cull comments.

Catalysts highlighted include: 1) IHOP’s turnaround efforts delivering sustained SRS gains; 2) Applebee's SRS returning to positive territory as new products are introduced; 3) refinancing debt that we project will benefit annual free cash flow by $12 million-$13 million, or roughly $0.65/share; and 4) a healthy increase in the dividend, which has a current yield of 4.0%.

O'Cull estimate the quarterly dividend could be increased to $0.90/share from $0.75 during the next 18 months, yielding 4.8% on the current stock price (average yield is 2.5% for dividend paying restaurant stocks).

For an analyst ratings summary and ratings history on DineEquity click here. For more ratings news on DineEquity click here.

Shares of DineEquity closed at $76.41 yesterday.

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