UPDATE: Credit Suisse Initiates Coverage on LinnCo with Neutral Rating, $37.50 PT
In a report published Wednesday, Credit Suisse Group initiated coverage on LinnCo (NASDAQ: LNCO) with a Neutral rating and $37.50 price target.
Credit Suisse noted, “Our Neutral rating is primarily a reflection of our Neutral stance on Linn Energy (LINE). In our view, LINE's mid-single digit distribution growth prospects are fairly reflected in units at the moment. Our $37.50 target price is based upon our estimation that LinnCo (LNCO) should economically trade at a 6.5% discount to LINE...Economics often differ with reality. And, in our view, the real value of LNCO is likely going to be determined by another publically traded E&P company's management team and shareholder base. Since Linn Energy announced its intention to IPO LNCO, we have believed and continue to believe one of the primary reasons behind LNCO's formation is to create a currency that will enable Linn Energy to execute a corporate acquisition. Given the wide differential in multiples between LINE and its c-corp peers, we believe this type of transaction has the potential to be highly accretive. If our belief is correct, another E&P's management team and existing shareholders will be the largest shareholders of LNCO and will dictate its ultimate value.”
LinnCo closed on Tuesday at $37.07.
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Tags: Credit Suisse Group