UPDATE: Citigroup Upgrades HSN Following Liberty Debt Issuance Announcement

In a report published Thursday, Citigroup analyst Jason B. Bazinet upgraded the rating on HSN HSNI from Neutral to Buy, and raised the price target from $59.00 to $67.00. In the report, Citigroup noted, “We're upgrading HSNI from Neutral to Buy and raising our price target from $59 to $67. Our new price target ascribes a 15.5x 2015 EPS ($64 per share) plus the value of HSN's cash ($3 per share). Yesterday, Liberty announced it was issuing $350 million in debt that yields a 1% cash coupon plus the option to convert into HSN's equity at $74.31 per share until 2043. This relatively low conversion price – which assumes just a 1% CAGR in HSN's share price over the next 30 years – has led many investors to assume Liberty finds HSN's equity unattractive at current levels. We come to the opposite conclusion. After a year of underperformance (HSN is down 3% this year versus 16% appreciation in the SP500 and 18% appreciation at LINTA), HSN's equity is more compelling today than it's been in quite some time.” HSN closed on Wednesday at $53.57.