UPDATE: Citigroup Initiates ADT Corporation at Buy on Valuation

Citigroup initiated coverage on ADT Corporation

with a Buy rating and a $48 price target. Citigroup noted, "We unwound the complex accounting and adjusted cash flows to estimate steady-state free cash flow. ADT currently trading at just 8.7x fully taxed FCF. We think 10x is closer to fair value, or about $42 a share. Value of NOLs and potentially hidden tax assets adds $6 a share, bringing fair value to $48." ADT Corporation closed at $41.28 on Friday.