Blucora (BCOR) Target Cut to $16 by Wedbush Amid HD Vest Deal

Wedbush lowers its price target on Outperform-rated Blucora (Nasdaq: BCOR) from $18.50 down to $16 following news that it is moving to acquire HD Vest for about $580 million.

Analyst Gil Luria noted the following key points:

• We believe the most important development is that the company plans to divest both InfoSpace and Monoprice, to be completed in 1H16. Additionally, BCOR announced that it will focus on an aggressive debt pay down strategy with a target capital structure of 3.0x net leverage by early 2017, and subsequently allocate at least 30% of FCF to returning cash to shareholders, by either share repurchases or dividends.
• We believe the value of BCOR is expressed in TaxACT and HD Vest’s combined pro forma 2015 revenue of $436.8m and adjusted EBITDA of $86.5m, excluding synergies. The transaction is expected to generate synergies that will benefit EBITDA by $5m by 2017.
• We continue to believe that TaxAct in itself is worth $16/share and that any residual value net of cash, acquisitions, divestments and NOLs represents upside to that value. We believe this value will be realized by the time the set of acquisitions and divestitures is complete over the next 12 months.

For an analyst ratings summary and ratings history on Blucora Inc. click here. For more ratings news on Blucora Inc. click here.

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