New CIBC report - June 2nd
June 2, 2011
Stock Rating: Sector Performer
Sector Weighting: Market Weight
12-18 mo. Price Target $5.50
YLO-TSX (6/2/11) $3.81
Yellow Media Inc.
YLO Shares Under Material Pressure -- Has Anything Really Changed?
YLO shares have faced a material decline over the past week, even in the face of a buyback that has been fully active since onset two weeks ago. What, if anything of any consequence, has changed for the business? Nothing too material, but we are seeing speculative pressure on the stock.
There have been a few real events that have weighed on the story. On May 18, the CMO resigned suddenly after a year or so on the job. The same day, selling by the CFO was reported. While the sales were the result of an investment loan coming due, the noise was unwelcomed by investors.
However, some aggressive activity in YLO's pref shares along with some overreactions have piled on to drive down YLO shares (along with most of the capital structure). We see this as little more than speculation, yet the
shares have clearly responded otherwise.
Lacking any real new facts, we continue to rate the name at Sector Performer. The story is not without risks, and, as such, is not for risk-averse investors. However, the recent trading has likely pushed past the point of a reasonable response to the risk profile in the near term.