UPDATE: Topeka Capital Markets Upgrades AOL to Buy, Raises PT on Compelling Risk-Reward Scenario

In a report published Thursday, Topeka Capital Markets analyst Victor Anthony upgraded the rating on AOL AOL from Hold to Buy, and raised the price target from $41.00 to $43.00. In the report, Topeka Capital Markets noted, “We are upgrading the shares of AOL to Buy from Hold and setting a $43 one-year price target ($41 previously). Trading at 4.8x 2014 EV/EBITDA, at a 50% discount to the group of online media stocks, we believe the shares offer a compelling risk-reward scenario, with upside of 25% versus downside of 10%. The above peer 9% FCF yield is attractive. Concerns regarding challenging growth prospects, Patch profitability, and quality of Adap.TV's inventory, in our view, are reflected in the current trading multiple. Conversely, we see catalysts of further expense reductions, accelerating growth in video, continued strong capital returns, and resiliency in the core, driving above consensus profit growth in 2014 and 2015.” AOL closed on Wednesday at $34.37.