UPDATE: Citigroup Upgrades HSN to Buy; Valuation, Buyback

Citigroup raises its rating from Neutral to Buy on HSN HSNI and increases its price target from $41.50 to $42.50 on compelling valuation and share buyback. Citigroup says, "Three reasons for the upgrade: 1) Likely tender for 11.25% notes, 2) Potential to accelerate buybacks, 3) Business now operating at parity versus QVC over sustained period of time. …We value HSN at 10.5x 2013 free cash flow plus the value of the cash on the balance sheet. As such, we believe fair value is $42.50 a share." HSNI closed at $36.93 on Monday.