UPDATE: Citigroup Downgrades HSN to Neutral on Modest Upside Potential

Citigroup lowers its rating on HSN

from Buy to Neutral and maintains its $42.50 price target. Citigroup notes, "We rate HSN Neutral (2). Despite potential to accelerate buybacks and solid operating performance, we see only modest upside from current levels. …Our $42.50 target price is based upon 10.5x 2013E free cash flow plus value of cash on the balance sheet. We carry HSN at 10.5x FCF." HSNI closed at $40.90 on Tuesday.