Sterne Agee Not Overly Excited About New Activist in Boyd Gaming (BYD)

Sterne Agee analyst David Bain is sticking with a Neutral rating and $9.50 price target on Boyd Gaming (NYSE: BYD) amid news activist fund Elliot Associates showed a new stake in the company and speculation they may push for value creation in the form of a REIT structure.

Bain noted the following: 1. Boyd Family ownership is ~30%. REITs typically adopt ownership documents that person shall beneficially own or constructively own more than 9.9% in value of a public REIT. The Boyd family would need to sell down its stake; 2. BYD has $1.1b of NOLs. Some have argued an equity revaluation upward outweighs its NOL value. However, to dismiss visible tax savings of this magnitude to enter into a REIT structure may prove speculative, depending on forward market conditions; 3. BYD leverage is over ~6x. While an equity deal is possible down the road, we find this difficult to be an appetizing solution – again, depending on forward market conditions (speculative).

For an analyst ratings summary and ratings history on Boyd Gaming click here. For more ratings news on Boyd Gaming click here.

Shares of Boyd Gaming closed at $11.80 yesterday.

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