Post by
mulliganforlife on Apr 03, 2019 8:40am
TD Raises target to $13.00 from $12.5
We like the growth prospects in the video content production and distribution business, and we believe that the market agrees because key comps continue to trade above 10x forward (2019E) EBITDA (see comp table in Exhibit 3). We believe that KEW is developing a track-record as a good operator and consolidator in this industry, but the stock continues to trade at a meaningful discount to peers at 6.4x 2019E EBITDA. We believe that a material upward re-rating is likely in the coming months as investors see positive developments for both the industry (new streaming services from multiple large TMT players) and for KEW specifically. In addition to evidence in the coming quarters that 2019 guidance is on track, we look forward to the announcement of accretive acquisitions, and we expect meaningful improvements in FCF in 2019 (see page two for more details). A larger scale business and increased trading liquidity will likely be necessary to fully close the valuation gap between KEW shares and its peers, but over the next year, we believe that the gap will narrow and that the 8.5x forward EBITDA is achievable one year from now. We reiterate our ACTION LIST BUY rating.