Stifel Initiates Coverage On Peak Resorts

Stifel initiated coverage on Peak Resorts Inc SKIS Tuesday with a Buy rating and $10 price target.

Analyst Steven Wieczynski viewed “Peak as a mispriced total return growth opportunity, as shares have traded off 14 percent (S&P500 down 3 percent for the corresponding period) following the company's successful November 20, 2014 IPO.”

Wieczynski believed “the current valuation of 6.8x FY16E EBITDA fails to properly ascribe value to Peak’s post-IPO M&A opportunities, margin enhancing benefits of recent reinvestments, and EBITDA growth potential extending from the scheduled West Lake Project at Mount Snow. Further, we view the $0.55 dividend (7 percent yield) as sustainable, strengthening the total return investment case, all else being

The $10 target was derived using the firm’s “FY16 sum-of-the-parts analysis. Key assumptions include the application of a 7.5x EBITDA multiple and net debt of $83 million.”

The analyst report also ascribed “$2 in value to Peak’s real estate holdings, $0.36 for its NOL, and deducted $1 to account for EB-5 funding raised to date.”

The firm modeled “FY15E-FY17E EBITDA of $27 million, $30 million, $35 million, with respective margins of 24.7 percent, 26.0 percent, 28.5 percent.”

Wieczynski forecasted a “2014-2017E three-year EBITDA CAGR of 12 percent” and expected “2015E-2017E EPS to total $0.07, $0.27, $0.44, respectively.”

Peak Resorts Inc recently traded at $7.70, down 0.65 percent.