Deutsche Bank Sees Share Buyback Potential For Jarden Corporation

Deutsche Bank maintained a Buy rating on Jarden Corporation JAH in a research note issued Friday and raised its price target from $70 to $72.

The company reported 3Q14 EPS of $1.17, $0.01 above analyst expectations.

Analyst Faiza Alwy noted that the company announced a 3-for-2 stock split and that while the “company did not repurchase any shares during the quarter, in our opinion the stock split implies a potential buyback is forthcoming and the split is a way to create liquidity – similar to early 2013.”

“Management has indicated bank leverage target is close to 3x for the year...an illustrative $200m buyback would take estimated bank leverage to 3.1x by the end of the year,” according to Alwy.

The report concluded that the current valuation supports a Buy and that “shares are trading well below historical average P/E relative to market and peers; Our DCF yields $72 (3.3 percent sales CAGR; 0.4 pts of margin expansion through 2021 discounted at 8 percent).

Jarden Corporation closed at $62.26 Thursday, up 5.58 percent.