UPDATE: Citigroup Raises PT on Family Dollar on Merger Speculation
In a report published Friday, Citigroup analyst Deborah L. Weinswig reiterated a Neutral rating on Family Dollar (NYSE: FDO), and raised the price target from $69.00 to $77.00.
In the report, Citigroup noted, “Speculation of an FDO LBO or strategic merger appears to have heated up following the company's better-than-expected F3Q13 results on July 10th. We put the probability of either action at 50%/50%, based on our proprietary analysis (see our LBO and merger models later in this report). FDO ranks #3 on our Retail LBO Scorecard for its attractiveness as an LBO or merger target, given the opportunity for operational improvement relative to peers and low debt levels. We maintain our Neutral rating but are raising our target price to $77, up from $69 prev. Our valuation now incorporates a 50% weighting for a takeout at $85.50 (9.8x 2014 EBITDA), and a 50% weighting for our fundamental valuation of $69 (unchanged), which is 16x our calendar 2014 EPS estimate of $4.33.”
Family Dollar closed on Thursday at $68.54.
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