“On 1/12/17, the company announced that is it reviewing strategic alternatives and has engaged investment banks to assist,” Imperial Capital analyst George Kelly explains.
Kelly is bullish on ClubCorp and discussed five reasons he believes a buyout is imminent:
- 1. A $50 million IT project is nearing completion and could help boost margins in the second half of 2017.
- 2. Imperial Capital expects $100 million in annual discretionary free cash flow in 2017 and 2018.
- 3. ClubCorp’s “trophy properties” could sell for as much as 12x EBITDA and could be used to reduce the company’s debt.
- 4. Recent property sales by other publicly-traded companies in Japan indicate an appetite for M&A in the space.
- 5. Activist investor FrontFour has been pressuring ClubCorp to pursue strategic alternatives.
Imperial maintains an Outperform rating on ClubCorp and a $21 price target for the stock. The price target is based on 9x multiple on Imperial’s 2017 EBITDA estimate of $262 million.
The stock jumped 15.6 percent on Thursday after it reported the news. Shares are now up 10.7 percent in the past year.
ClubCorp is expected to report earnings on February 22.
Latest Ratings for MYCC
|Oct 2016||Imperial Capital||Maintains||Outperform|
|Sep 2016||Goldman Sachs||Initiates Coverage on||Neutral|
|Sep 2016||Imperial Capital||Upgrades||In-Line||Outperform|
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