UPDATE: Monness Crespi Initiates Coverage on Spectrum Brands on Compelling Cash Flow, Deleveraging Opportunity

In a report published Tuesday, Monness Crespi Hardt analyst Jim Chartier initiated coverage on

with a Buy rating and $78.00 price target. In the report, Monness Crespi Hardt noted, “We are initiating coverage of Spectrum Brands Holdings. Inc. (SPB) with a Buy rating and $78 price target. We believe investors do not appreciate the company's potential for cash flow generation and deleveraging over the next couple of years. The stock is currently trading at 7.6x our FY14 FCF per share estimate of $7.83, giving it a 13% FCF yield. The company's strong portfolio of less discretionary, replacement products produces stable revenues and cash flow. The company's Spectrum Value business model provides value to the consumer (same or better functionality at lower cost) and retailers (best margin in the category). We estimate Spectrum Brands can pay down $740 million of debt over the next two years, reducing its debt/EBITDA multiple from 4.8x to 3.4x.” Spectrum Brands Holdings closed on Friday at $60.54.