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UPDATE: Evercore Upgrades Vail Resorts On Attractive Price, Favorable Litigation News

Erika Janowicz

In a report published Monday, Evercore analyst Smedes Rose upgraded shares of Vail Resorts (NYSE: MTN) from Equal-Weight to Overweight and raised the price target from $78.00 to $85.00 on shares current underperformance and positive litigation reports.

Rose sees Vail's current stock price as “attractive” with shares down seven percent year-to-date. In addition, Evercore wrote that shares have reacted favorably on litigation news on Park City, where the judge ruled in favor of the company in 8.5 out of 9 motions.

The analyst commented, “Lawsuits are difficult to predict, and Park City Mountain Resort (PCMR) will appeal; and, at least publicly, the company is vociferous in its opposition to Vail. PCMR owns the base (entrance) to Park City mountain as well as the parking facilities and thus keeps a big seat at the negotiating table. At some point, we would expect pressure from local politicians to resolve this issue - disruption to Park City's ski season would surely be economically disastrous for the town. We would look for a June ruling as to whether or not PCMR can remain in place while litigation moves forward.”

Evercore sees Vail Resort's cash flow as significant, even amid “unfavorable” snow seasons. Rose remarked that the company doubled its dividend in April, highlighting a positive cash outlook. The analyst estimates a 25 percent potential return from Vail Resort's current levels. As integration of Park City becomes clearer, Rose sees shares reaching $90.00 to $95.00.

The analyst raised F3Q (April) estimate from $2.90 to $2.92 per share. Evercore's EPS forecast for FY14 and FY14 was increased from $0.75 and $1.62 to $0.78 and $1.65, respectively.

Shares of Vail Resorts closed at $69.69 on Friday. The stock jumped 2.07 percent following Monday's morning bell. Shares are currently trading at $70.92, up 1.76 percent.

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