UPDATE: Wells Fargo Upgrades Outfront Media (OUT) to Outperform
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(Updated - November 22, 2016 8:31 AM EST)
Wells Fargo upgraded Outfront Media (NYSE: OUT) from Market Perform to Outperform and a rpice target of $27-$29. Analyst Marci Ryvicker noted favorable risk-reward.
Ryvicker explained, "It’s become apparent to us since OUT’s 11/7 earnings call and 11/9 presentation at our TMT conference (NYC) that there is huge focus and even concern over the NYC MTA (Metropolitan Transit Authority) contract. The questions we are getting now aren’t just “what if OUT loses?” but rather “what happens to capex, the rev share and AFFO if OUT wins?” We finally had the time to dig DEEP into this contract--understanding the potential nuances and creating some pretty good forecasts for OUT’s 3 potential outcomes (winning the entire thing, winning part, or winning nothing). At the end of the day, our probability-weighted scenario analysis (detailed in the text) nets us an implied value of $30/sh. on the high end and $23/sh on the low end--a pretty compelling risk-reward given OUT’s 11/21 closing price ($23.16). Bottom Line: We view the sheer removal of the NYC MTA overhang as a significant positive catalyst for the stock and thus upgrade to Outperform from Market Perform & raise our val range to $27-29 from $23-25."
Shares of Outfront Media closed at $23.16 yesterday.
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