UPDATE: UBS Downgrades Patriot National (PN) to Neutral
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(Updated - November 16, 2016 9:04 AM EST)
UBS downgraded Patriot National (NYSE: PN) from Buy to Neutral with a price target of $6.50 (from $12.00). Analyst Brian Meredith thinks its credit facility will be a drag on earnings.
"We estimate that the new term loan will lower our 2017 and 2018 EPS estimates by approximately 25% due to both the higher interest rate (8.25% versus 3.94% on the old BMO term loan) and increased debt load. The new credit facility increases our estimated 2017 interest expense from $7.5mm to $20.1mm, which negatively affects our 2017 EPS estimate by $0.28/sh. We estimate that the special dividend will consume $67mm of the cash on hand, with interest and amortization hurting cash flow by $26mm in 2017 and $28.5mm in 2018, hurting PN's financial flexibility," said Meredith.
Shares of Patriot National closed at $6.29 yesterday.
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