FBR Hikes Peak Resorts Estimates Across The Board On Hunter Mountain Acquisition, Says IPO Story Now Validated

• Shares of Peak Resorts Inc SKIS are up 8 percent year-to-date, but dropped below the $7 mark several times during the period.
• FBR’s Barton Crockett maintained an Outperform rating on the company, while raising the price target from $10 to $11.
• The acquisition of Hunter Mountain is not only accretive but strategic too, Crockett stated.

Peak Resorts has agreed to buy Hunter Mountain for $35 million in cash besides assuming capital leases worth $1.8 million.

The deal, expected to be closed by December, the prime ski season, “appears to validate the IPO story-that Peak can consolidate the "mom and pop" drive-to ski market, supporting an attractive dividend yield while driving equity value,” analyst Barton Crockett mentioned.

Crockett believes the deal is accretive and strategic besides fattening the company’s dividend coverage. He also expects the company to make more such deals in the future given the track record of its team and the fragmented nature of the ski industry.

Crockett expects Hunter to be one of the top destinations for New-York City skiers looking for a day trip. He added that the acquisition of Hunter Mountain not only makes Peak Resorts a dominant force in the NYC skiing arena, but also an interesting acquisition candidate for larger operators with multi-mountain passes.

The analyst commented that Vail Resorts, Inc MTN could become interested in Peak Resorts as a way of boosting “NYC uptake of its Epic pass.”

The FY16 EBITDA, adjusted EPS and free cash flow per share estimates have been raised by $4.5 million to $36.5 million, by $0.14 to $0.58, and by $0.20 to $1.32, respectively.