By E&P Staff
Published: May 30, 2006 12:50 PM ET
NEW YORK Prudential Equity Research upgraded its rating on Tribune Co. this morning to "overweight" from "neutral" on news of the company's stock buy back of 25% of outstanding shares.
The note addressed Tribune's announcement that the company hopes to achieve $500 million in asset sales. The research firm gives the sale of the Chicago Cubs a 10% chance -- analysts think the sale of Tribune Tower is much more likely.
Prudential has a price target of $37 derived from an 8.5 times multiple on 2006 EBITDA estimate of $1,423 million a multiple roughly in line where the publishing group is trading.
"We think an 8.5 times multiple for Tribune makes sense for several reasons," wrote analysts. "We still do not believe the premium multiple valuation is appropriate given the challenges to the company's top line, the ongoing circulation fallout, and its potential longer-term impact on advertising growth."
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