Wedbush Reiterates On Outerwall, Sees Better Cost Control Ahead

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Wedbush reiterated its Outperform rating and $82 price target on Outerwall Inc OUTR  Friday, following the company’s Q4 results.

Analysts led by Michael Pachter noted that revenues came in below Wedbush’s estimates but in line with the Street at $601 million with EPS of $2.44.

Pachter commented that “management made sense of its initial guidance that called for flat EBITDA y-o-y by clarifying that it intends to close its unprofitable Canadian Redbox business and expects to aggressively invest in its rapidly growing ecoATM business.”

Outerwall is also expected to invest in “initiatives that drive higher basket size and traffic for its Redbox business” but the analysts did not expect a decline in core business and felt that the 2015 EBITDA guidance of $467-$512 million reflected an investment in successful lines of business.

Pachter concluded that the company will prioritize cost control and returning cash to shareholders during 2015 as well as the elimination of money-losing businesses.


The $82 price target reflected a 9.5x multiple on the firm’s 2015 EPS estimate of $8.64.

Outerwall Inc recently traded at $64.57, up 4.94 percent.
 

Posted In: Analyst ColorReiterationAnalyst RatingsMichael PachterWedbush
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