Piper Jaffray Upgrades MoneyGram To Neutral

In a report published by Piper Jaffray, it is upgrading MoneyGram International MGI to Neutral on improved capital structure.

Piper Jaffray said that it is upgrading MGI from Underweight to Neutral and raising its price target from $2.50 to $3.50 (9x EV/EBITDA on '12 estimates) following the announced recapitalization that is expected to close mid-2011. “The recapitalization will greatly improve MGI's capital structure by ending the PIK dilution and allow future value creation to flow equally to all shareholders. We estimate that the recapitalization will be neutral to our '12 estimate and slightly accretive to our '13 estimate since the PIK will not be growing the share count. Also, we believe MGI's ability to execute this transaction reflects improving fundamental trends in the money transfer industry and MGI's business.”

MoneyGram closed yesterday at $3.05.