Wells Fargo Sees Significant Upside in Nexstar (NXST) Following MEG Financing; Valuation Range Raised to $75-$96
Find out which companies are about to raise their dividend well before the news hits the Street with StreetInsider.com's Dividend Insider Elite. Sign-up for a FREE trial here.
Wells Fargo analyst Marci Ryvicker reiterated an Outperform rating and lifted her valuation range on Nexstar Broadcasting Group (NASDAQ: NXST) to $75-96 from $65-67, saying they believe there is still so much potential upside to this post the Media General (NYSE: MEG) financing.
Ryvicker commented, "Last night, NXST finally priced the rest of the MEG-related financing, which came in at LIBOR +3.00% (0.0% floor), which was pretty much as expected. Mgmt. also essentially raised its PF FCF guide by $40MM, or $0.85/share, which was also relatively in line. Now it's time to focus on what this New Co. could look like post close - and we really like what we see. From a high level, we could have a company that is right at the 39% cap (although this could be lower depending on the auction) and levered just about 4x by year-end 2017, which means there could be PLENTY OF CASH for dividends (we could see anywhere from a 4-6% yield by year-end 2017) and/ or buybacks ($1B over a 3-year period maybe?). We also think there could be anywhere from $25-50MM of incremental operating synergies, which would add another $0.28-$0.67 to our base case PF FCF estimate of $12/share. Based on the various sensitivity analyses we discuss in this note, we believe that PF NXST-MEG is worth anywhere from $75-96/share, which represents potential upside of 40-80% from today's close."
The firm is not changing FY16, FY17 EPS estimates of $3.96/$2.67 at this time.
Shares of Nexstar Broadcasting Group closed at $53.50 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Time (TIME): Stuck Until A Deal Is Announced - Wells Fargo
- Broadcom (AVGO) PT Raised to $210 at Mizuho
- Broadcom Ltd. (AVGO): Another Beat And Raise - Drexel Hamilton
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst PT Change
Related EntitiesWells Fargo
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!