Wedbush Raises PT on Arctic Cat to $25

Wedbush Securities has published a research report on Arctic Cat

after the company repurchased Suzuki's 33% stake for $79 million. In the report, Wedbush writes, "Arctic Cat announced it has acquired all of Suzuki's 6.1 million shares of Common B stock for $79.3 million, using existing cash on the balance sheet to fund the buyback. Suzuki has also relinquished its one board seat, but the existing supply arrangement for Suzuki to supply certain snowmobile engines and parts through 2014 remains in place. Even after the transaction, management expects to have $60 million in cash at the end of FY12 and no debt. Following the transaction, total shares outstanding is reduced to 12.3 million from 18.4 million, thus sharply increasing ownership of the company for existing shareholders. On such lowered share count, partially offset by reduced interest income from the use of cash to buy back the Suzuki stake, as well as increased number of stock options now in-the-money given the increased stock price, the buyback is approximately $0.39 accretive to EPS over the next twelve months." Wedbush Securities maintains its Neutral rating and has raised the price target from $20 to $25 on Arctic Cat, which is currently trading up $3.70 from yesterday's $18.99 closing price.