By: Jennifer Saba Something is brewing at Valassis suspects Prudential Equity Research analyst Steven Barlow.
In a report released this week, Barlow thinks there is a possibility that the company could go private based on an April 25th Valassis conference call where management said they are reviewing a variety of options to enhance shareholder value.
?A sign is the suspension of Valassis? share buyback program,? Barlow wrote. Prudential speculates that attorneys advised the company to stop the share-repurchasing program because ?something big is being considered? like a future acquisition or divestiture.
Prudential thinks the company could go for $35 per share with an upside of 21.7%. ?We believe investors want to own Valassis for its free cash flow generating ability and eventually a better pricing environment that has been pushed out.?
The risks to the thesis: Valassis? only real competition for inserts is News America, which is expected to continue with its aggressive pricing. An increase in paper costs and the overall advertising environment could also be a risk.
Prudential maintained its ?overweight? rating on the company.
In a report released this week, Barlow thinks there is a possibility that the company could go private based on an April 25th Valassis conference call where management said they are reviewing a variety of options to enhance shareholder value.
?A sign is the suspension of Valassis? share buyback program,? Barlow wrote. Prudential speculates that attorneys advised the company to stop the share-repurchasing program because ?something big is being considered? like a future acquisition or divestiture.
Prudential thinks the company could go for $35 per share with an upside of 21.7%. ?We believe investors want to own Valassis for its free cash flow generating ability and eventually a better pricing environment that has been pushed out.?
The risks to the thesis: Valassis? only real competition for inserts is News America, which is expected to continue with its aggressive pricing. An increase in paper costs and the overall advertising environment could also be a risks.
Prudential maintained its ?overweight? rating on the company.
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