UPDATE: Goldman Sachs Raises PT on KAR Auction Services on Credit Agreement Announcements
In a report published Thursday, Goldman Sachs analyst Matthew J. Fassler reiterated a Neutral rating on KAR Auction Services (NYSE: KAR), and slightly raised the price target from $21.50 to $22.00.
In the report, Fassler noted, “KAR recently announced amendments to its credit agreement for outstanding term loans, which enables the refinancing of the majority of its outstanding debt at significantly lower rates; term loan interest costs come down to 3.75% (LIBOR floor of 1% + 275 bps spread) from 5.0% (LIBOR floor of 1.25% + 375 bps spread). On estimated term loan debt, averaging over $1.6bn in FY13, interest expense savings is approximately $20mn ($0.09 EPS). Related to operating results, we believe that 1Q13 has progressed on track, and that IAAI (KAR's salvage business) has been able to move through most of the Hurricane Sandy vehicles which carried past year-end. More seasonal winter weather will benefit KAR's salvage business as collision and wear-and-tear on vehicles increase."
KAR Auction Services closed on Wednesday at $19.87.
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