Marcus Corporation (MCS): Raising PT On Significant Acquisition - B.Riley

November 22, 2016 7:36 AM EST
Get Alerts MCS Hot Sheet
Price: $30.65 --0%

Rating Summary:
    5 Buy, 1 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 24 | Down: 17 | New: 14
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B. Riley analyst, Eric Wold, reiterated his Buy rating on shares of Marcus Corp. (NYSE: MCS) and raised the price target to $33.50 from $31 after the company announced the acquisition of Wehrenberg Theatres.

The analyst believes this acquisition will accomplish 4 things:
1) boost the company's theater penetration in the key Midwest region
2) increase the circuit’s screen base by 29%
3) provide numerous paths to improve revenues/margins through MCS’ theater-enhancement strategy
4) provide an opportunity to implement a reverse-1031 tax strategy to monetize hotel assets

The analyst stated "we have been anticipating a major acquisition for the past year, we would argue the 50% gain in MCS shares over that period has been a function of the outperformance of the MCS circuit vs. any increased optimism around hotel monetization efforts – and this remains incremental to both estimates and valuation".

The price target increases from $31.00 to $33.50 on an increasing multiple on the Theater division EBITDA estimate before any contribution from the Wehrenberg acquisition.

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

Shares of Marcus Corp. closed at $29.50 yesterday.

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