Bank Of America: Vail Resorts, Inc. Deal Could Boost Share Price To $100

Vail Resorts, Inc. MTN extended its gains last Friday after the company paid $183 million to acquire Park City Resorts from privately held Powdr Corp., ending three years of litigation.

"It's the best possible outcome," Bank of America's Shaun Kelley said in a note Friday on the acquisition, which is adjacent to Vail's existing Canyons Resort about 20 miles east of Salt Lake City.

The deal will add to Vail earnings and could push its stock to $100 a share according to Kelley, who maintains a Buy rating and $92 target.

Separately, Credit Suisse's Joel Simkins boosted his target on Vail to $97, maintaining a Buy rating. Simkins also increased his estimates on on the company in light of the deal.

Vail, which expects to make more comments on the deal at its fourth-quarter conference call September 24, said the transaction will result in $35 million in extra 2015 earnings before interest, taxes, depreciation and amortization, as well as annual tax benefits of $12 million for seven years.

In addition to Park City skiing terrain, Broomfield, Colorado-based Vail acquired lands with approved zoning for 687,000 square feet of residential and commercial development. The operation will open for the upcoming season but initially remain separate from Vail's adjacent Canyons Resort.

Powdr, which lost its long-term lease on the property in 2011, had threatened to shut down the operation for the upcoming season.

Last year a snow drought hurt western skiing operations. The National Weather Service is calling for an equal chance that 2014-2015 winter precipitation in the Park City region will be above or below average.

Vail closed Friday at $87.53 per share, up two percent.

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Posted In: Analyst ColorNewsPrice TargetReiterationAsset SalesAnalyst RatingsBank of AmericaShaun Kelley
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