Barclays, Macquarie Upgrade Nielsen Holdings On Elliott Management Stake, Likelihood Of Sale

Nielsen Holdings PLC NLSN has endured fundamental changes, leading sell-side analysts to dissect the data company's future. 

The Analysts

• Barclays analyst Manav Patnaik upgraded Nielsen Holdings from Underweight to Equal Weight with a price target lifted from $21 to $27.
• Macquarie analyst Tim Nollen upgraded Nielsen Holdings from Neutral to Outperform and increased the price target from $24 to $34.

The Thesis

Both upgrades were driven by projections of limited downside in light of Elliott Management’s acquisition of an 8-percent stake in Neilsen and push for a sale of the company.  and the resulting push for a sale of the company. 

Nielsen has a lack of competitors, Barclays' Patnaik said in a note. (See the analyst's track record here.) 

Private equity is likely the best route for Nielsen, given that The Wall Street Journal reported many firms having interest, the analyst said.

“Also recall that NLSN’s predecessor company was taken private in 2006 by a PE consortium,” Patnaik said.

Macquarie's Nollen highlighted weak spending and heavy investment that have led to a recent substantial downfall. (See the analyst's track record here.) 

Nielsen also recognizes private equity as the most likely and most strategic plan, the analyst said.

“Management change at Nielsen means the timeline could move quickly. CEO Mitch Barns is taking early retirement at year-end. A CEO search is underway, and the pressure is now on the board to either pursue a sale or seek to dig in as an independent company under new management,” he said.

If no changes are made, Nielsen's challenges will make future targets unachievable, according to Macquarie. 

Price Action

Nielsen shares soared 11 percent on Monday when news of Elliot Mangement's stake was announced. The stock was up nearly 5 percent at $25.82 at the time of publication Tuesday. 

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