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Citigroup Upgrades RCS Capital, Notes 'Upside Now Exceeds Downside'

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Earnings Calendar for June 26, 2013
UPDATE: Dahlman Rose Initiates Coverage on US Silica Holdings

William Katz of Citigroup on Tuesday upgraded shares of RCS Capital Corp (NYSE: RCS) to Buy from Neutral with a price target raised to $19 from a previous $13 following a recent meeting with the company's management.

“We came away from our recent management meeting constructive around: 1) B/D stability and ability to drive higher margins into 2015; 2) viability of Wholesale/Investment Banking platforms; and, 3) expect management to make additional moves to alleviate perceived franchise conflicts of interests,” Katz wrote.

Katz believes that at this time, technical selling pressure should abate following the termination of the Cole Capital deal and renegotiating Luxor's convertible stake. The analyst also points out that short interest is now 9 percent of shares outstanding, suggesting an improvement in fundamentals or sentiments could “significantly” squeeze shares higher.

According to the analyst, several upcoming catalysts can support shares. Katz points to further NTR selling agreement reinstatements and broadening alternative sales, moves to deepen fiduciary transparency, realization of B/D synergies and a steady/favorable FA growth/production dynamics.

Posted-In: Citigroup Cole Capital Investment Banking Luxor William KatzAnalyst Color Price Target Analyst Ratings

 

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