UPDATE: Bank of America Raises Price Objective on Service Corporation Following Acquisition Offer

In a report published on Wednesday Bank of America raised their price objective on Service Corporation International SCI and maintained their buy rating on the company. In the report analyst Robert Willoughby commented that, "In a long expected bid, SCI has returned with a $13.25 per share acquisition offer for Stewart Enterprises, the difference this time being that both boards have approved the transaction and Stewart Chairman Frank Stewart, who controls the Class B voting shares, has agreed to vote for the transaction. The deal price implies an 11.2x EV/EBITDA multiple on our CY14 forecast for Stewart, before an estimated $60 million in synergies and likely divestiture proceeds. The deal may not close until early 2014, given regional FTC challenges, and for the purposes of our model, we are assuming SCI borrows $1.1 billion to finance the deal and a closing date of March 31. We are raising our 2014 EPS estimate for SCI to $0.97 (from $0.95) to reflect expected accretion from the merger and half the expected synergies. Our outlying year forecasts will trend higher on further synergy capture and rapid deleveraging on higher cash flow. Our P.O. moves to $22 (from $20) on the better view." Service Corporation currently trades at $18.71 and is up 6.24 percent on the day