Benchmark Starts United Online (UNTD) at Buy, 8% Dividend Yield Implies Attractive Entry Point

Benchmark initiates coverage on shares of United Online (NASDAQ: UNTD) with a Buy rating and $7 price target.

The firm notes that management is currently busy re-branding its content and media segment due to subscriber losses. Benchmark believes that management will be successful in their attempt and highlights their past performance, operational efficiency, and maximizing cash flow ability.

The company is paying out a 8 percent dividend with an 8 percent yield. The firm believes that UNTD will be able to sustain this dividend as they forecast $78 million in free cash flows for 2011 and $72 million in free cash flows for 2012.

An analyst at Benchmark comments, "Using 2012E adjusted OIBDA and a sum of the parts valuation, we believe the FTD and Communications segments, including debt, represents about 95% of the current market value of United Online. This implies that the Content & Media segment is being attributed essentially no value, reflecting heavy skepticism surrounding the implementation of Memory Lane."

For 2011, the firm estimates EPS of $0.96 and EBITDA of $169 million and EPS of $0.83 and EBITDA of $159 million for 2012.

For more ratings news on United Online click here and for the rating history of United Online click here.

Shares of United Online closed at $5.17 yesterday.

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