BMO Capital Upgrades Harte-Hanks Inc. (HHS) to Outperform

BMO Capital upgraded Harte-Hanks Inc. (NYSE: HHS) from Market Perform to Outperform with a price target of $7.00, citing a safe 7% dividend yield and potential share buyback.

Analyst Daniel Salmon commented, "We believe the absence of an update around the strategic vision of the company following former CEO Robert Philpott’s exit on July 9 has contributed to pressure on the stock. Our view of the fundamentals remains challenged and we offer no new positive news on that front. However, with the stock at these levels and CFO Doug Shepard in the interim CEO’s seat, we believe the risk/reward is incrementally positive. While we believe Harte Hanks will continue to evaluate M&A opportunities and capital spending to accelerate growth, we believe a more conservative positioning focused on organic growth is likely. Most importantly – and in part due to high inside ownership – we believe the current dividend is safe, and it’s also currently yielding just short of 7%. Moreover, we believe there is increased likelihood of some nominal share buyback; our main question would be if management would consider incremental borrowing (either on bank facilities or issuance of new debt) or simply use excess FCF. Finally, it’s worth revisiting the idea of management-led leveraged buyout. We haven’t visited this topic since shortly after the financial crisis (and it obviously didn’t happen), but remind investors that Harte Hanks has previously gone private (in 1984) before emerging again in a 1993 IPO, and CEO/CFO Shepard has experience in this area through his prior experience taking Eye Care Centers of America private a decade ago."

For an analyst ratings summary and ratings history on Harte-Hanks Inc. click here. For more ratings news on Harte-Hanks Inc. click here.

Shares of Harte-Hanks Inc. closed at $4.95 yesterday.

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