Wells Fargo Starts CBS Outdoor Americas Inc. (CBSO) at Outperform

Wells Fargo initiated coverage on CBS Outdoor Americas Inc. (NYSE: CBSO) with an Outperform rating and a price target of $36-$38.

Analyst Marci Ryvicker said, "While we have covered CBS Corp. (CBS, Outperform) for the past 8 years, we didn’t really “know” CBS Outdoor all that well given the parent company’s focus has been more on creation and monetization of content than on straight advertising (which is essentially what outdoor is). Well, now that we have gotten deeply familiar with CBSO’s portfolio of assets, management team and financials, we like what we see and believe there could be upside to numbers given growth in digital, prospects for better execution (CEO Jeremy Male has one of the best reputations in the industry), and greater exposure to national and large market DMAs, which are likely to capitalize on the TAB’s measurement system over time. Given receipt of its PLR, we think the “right” way to value CBSO is as a REIT, and we currently estimate 2014PF and 2015 AFFO at $2.53 and $2.74, respectively. Applying a 13-14x multiple on our 2015E AFFO yields a $36-38 valuation (our five-year DCF analysis is not that different), which suggests upside of about 26% to the current price of $29.30."

val. We also introduce 2014 and 2015 EPS ests. of $0.99 and $1.46, respectively.

For an analyst ratings summary and ratings history on CBS Outdoor Americas Inc. click here. For more ratings news on CBS Outdoor Americas Inc. click here.

Shares of CBS Outdoor Americas Inc. closed at $29.30 yesterday.

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