UPDATE: B. Riley Upgrades Regal Entertainment (RGC) to Buy
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(Updated - October 31, 2016 8:12 AM EDT)
B. Riley upgraded Regal Entertainment (NYSE: RGC) from Neutral to Buy with a price target of $24.75.Analyst Eric Wold sees an attractive entry point.
"While we have been impressed with the progress and results of Regal Entertainment’s (RGC) theater enhancement strategy and improvements to its guest loyalty program since earlier this year (see 4/12 note CinemaCon Recap – Day 1), we have been hoping for a more attractive entry point before the 2017/2018 film slates frame investors’ valuation thoughts. And we believe that entry point materialized on Friday with the 5.2% drop in the shares following upside Q3 results," said Wold.
The analyst added, " While we can understand that some investors expected another special dividend and may have been disappointed without one announced, we actually agree with management’s capital allocation decision towards theater enhancements that boost the earnings outlook in the coming years. We also believe that long-term investors will be better served with this decision vs. another special dividend payment (especially with shares already offering a 4.1% regular yield). Therefore, after being on the sidelines since 3/30, we are taking this opportunity to upgrade RGC to Buy with a projected total return of 20.4% (including 16.3% upside to our price target and the 4.1% dividend yield)."
Shares of Regal Entertainment closed at $21.28 yesterday.
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