BWS Financial Initiates Verso Corp At Buy, Sees Opportunity For Upside Following Bankruptcy

BWS Financial has started coverage of Verso Corporation VRS with a Buy rating and price target of $25, implying a potential upside of 117 percent over Tuesday's close of $11.53.

Memphis, Tennessee-based Verso is a producer of coated paper, which is used in magazines, catalogs and high-end advertising. The initiation comes after the company successfully emerged from bankruptcy in mid-July.

Verso's restructuring reduced the company's debt by $2.4 billion and includes $595 million in exit financing to support ongoing operations and capital investment. BWS said the restructuring should allow Verso to be profitable from day one as a new entity.

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In a research note, BWS Financial said Verso continues to dominate the coated paper industry in North America with 50 percent market share, which should boost profitability in the remainder of 2016 and into 2017.

"A profitable business with positive free cash flow should enable VRS to invest in the business to grow organically," analyst Hamed Khorsand wrote in a note dated July 20.

For 2016, Khorsand expects EPS of $2.04 on revenue of $1.36 billion.

At time of writing, shares of Verso were seen up 1.46 percent at $11.80.

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