Stifel Upgrades National CineMedia After 20% Drop

Stifel upgraded National CineMedia, Inc. NCMI from Hold to Buy and set a $15 price target Tuesday.

Analyst Benjamin Mogil commented that he believed “everything that can go wrong, has” already happened with the stock.

The rating change comes after news that the Department of Justice will seek to block the company’s acquisition of Screenvision Cinema Network LLC. The news caused the stock to plummet approximately 20 percent Monday.

The analyst report suggested that “the current valuation basically implies a very small chance that NCM will be successful in its court case to merge with Screenvision. While not having a view on whether or not this is the case, we do believe that the risk/reward for this story has gotten better particularly with positive 4Q14 guidance and solid commentary on the upfront process.”

“The company did go to lengths to note dividend security at the operating and public company level. We estimate that break-even for the dividend is around the $200-210mn EBITDA range. We believe that the company should at least consider another special dividend next year to ease these concerns,” according to Mogil.

National CineMedia recently traded at $13.32, up 7 percent.