Outerwall (OUTR) PT Cut to $61.50 at Roth Capital with Redbox Weak as Expected
Roth Capital maintained a Buy rating on Outerwall Inc. (NASDAQ: OUTR), and cut the price target to $61.50 (from $80.00), following weak Redbox performance. OUTR released updated guidance for FY15, which reflects lower than expected RB revenue in 4Q, in addition to announcing an expected write-off certain capitalized assets associated with SampleIt, which OUTR is now discontinuing. OUTR lowered RB revenue/Adj. EBITDA/FCF guidance from ~$1.803B/$500M/$267M at the midpoint, to ~$1.758B/$468M/$245M, respectively.
Analyst Darren Aftahi commented, "Our proprietary analysis note from last week, which suggested 4Q rentals were significantly lagging our 12% q/q projected growth, came to fruition as OUTR lowered 4Q Redbox (RB) guidance by about ~$45M at the midpoint. Shares trading in the mid- $40’s implies the RB business is not worth much, assuming the Coin business could get ~5x EBITDA in a sale; however, believing this is not the case, we maintain our Buy, but lower our PT from $80 to $61.50."
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Shares of Outerwall Inc. closed at $58.06 yesterday.