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NLSN

Nielsen

$25.87

1.25 (5.08%)

10:22
08/14/18
08/14
10:22
08/14/18
10:22

Analysts up Nielsen rating as Elliott takes activist stake, plans push for sale

After jumping yesterday after Elliott Management disclosed an 8.4% stake in the company, shares of Nielsen (NLSN) are again on the rise this morning as Wall Street digests the announcement and two Wall Street firms upgraded the stock. Macquarie analyst Tim Nollen raised Nielsen's rating to Outperform, saying the activist stake raises the possibility of a sale, while his peer at Barclays upgraded the shares to Equal Weight as he now sees limited downside in the stock and possible deal scenarios. ACTIVIST STAKE: Yesterday, Elliott Asset Management disclosed an 8.4% stake in Nielsen in a filing with the SEC that allows for activism. Elliott collectively has beneficial ownership of 18M shares of common stock constituting approximately 5.1% of the shares outstanding and combined economic exposure in Nielsen equivalent to 30M shares, constituting approximately 8.4% of the shares outstanding. Elliott will encourage Nielsen to "undertake a full strategic review of, and initiate a process to explore, the sale" of the company in full, in addition to the exploration of the sale of certain of its businesses or assets, including transactions in which the fund "may seek to participate and potentially engage in, as a purchaser or investor." MACQUARIE, BARCLAYS UPGRADE NIELSEN: In a research note to investors this morning, Macquarie's Nollen upgraded Nielsen to Outperform from Neutral and raised his price target on the shares to $34 from $28. The analyst argued that Elliott Management's 8.4% stake in Nielsen will result in either a sale of the entire company, splitting it in two, or selling the Buy division and keeping Watch as a public company. Given the early retirement of CEO Mitch Barns at the end of the year, a rapid sale process could ensure with private equity firms likely leading the way, he contended. While his peer at Barclays thinks Nielsen's prospects as a standalone public company "remain grim," analyst Manav Patnaik upgraded the stock to Equal Weight from Underweight given limited downside now that Elliott Management has acquired an 8.4% stake and is pushing for a sale of the entire company. The analyst also raised his price target on the shares to $27 from $21, assuming a 60% likelihood of outright sale for $32 per share, with lower scenarios for just a Buy sale. STRATEGIC REVIEW COULD CONCLUDE IN NEXT 3 MONTHS: Commenting on the news, Morgan Stanley analyst Toni Kaplan told investors that she believes Nielsen could conclude its planned strategic review with a sale of the Buy business or a sale of the whole company, and that timing of the decision could take place over the next three months. Given the results that have been found in other strategic review processes as well as recent activist activity, no sale at all is potentially the least likely outcome, she contended. The analyst reiterated an Overweight rating and $26 price target on the shares. Meanwhile, Jefferies analyst Surinder Thind argued in a research note of his own that even following yesterday's 12% rally, there is "significant shareholder value to be unlocked" at Nielsen. The analyst noted that he believes Nielsen's Watch segment could be worth more than all of the company currently, estimating a value of $29-$33 per share. Overall, Thind's "rough math" suggests a buyout for the entire company could be worth $30 per share. He reiterated a Buy rating and $29 price target on the shares. Also keeping an Outperform rating on Nielsen's shares, Baird analyst Jeffrey Meuler raised his price target on the stock to $30 from $26 following the announcement. The analyst sees multiple avenue to unlock value including the company's Watch and Buy segments, which could be of interest of private equity. Additionally, Meuler pointed out he sees the potential for expense reduction and a more broad and urgent strategic review. PRICE ACTION: In morning trading, shares of Nielsen have gained about 6.1% to $26.12.

NLSN Nielsen
$25.87

1.25 (5.08%)

08/14/18
08/14/18
NO CHANGE
Target $29

Buy
Jefferies sees 'significant shareholder value to be unlocked' at Nielsen
Even following yesterday's 12% rally, there is "significant shareholder value to be unlocked" at Nielsen Holdings, Jefferies analyst Surinder Thind tells investors in a research note. A strategic review of the entire business is now in play with Elliot Management taking an activist stake, Thind contends. The analyst believes Nielsen's Watch segment could be worth more than all of the company currently. He estimates the Watch segment's value at $29-$33 per share. Further, Thind's "rough math" suggests a buyout for the entire company could be worth $30 per share. For any buyer, Nielsen's $8.3B of net debt is a "limiting factor on the price that can be paid," the analyst writes. He thinks the pool of potential acquirers is mainly financial in nature and not strategic. Thind keeps a Buy rating on Nielsen with a $29 price target.
08/14/18
BARD
08/14/18
NO CHANGE
Target $30
BARD
Outperform
Nielsen price target raised to $30 from $26 at Baird
Baird analyst Jeffrey Meuler raised his price target on Nielsen to $30 from $26 following the announcement Elliott Management of an 8.4% activist stake. The analyst sees multiple avenue to unlock value including the company's Watch and Buy segments which could be of interest of private equity. He also sees the potential for expense reduction and a more broader and urgent strategic review. Meuler reiterated his Outperform rating on Nielsen shares.
08/14/18
LEHM
08/14/18
UPGRADE
Target $27
LEHM
Equal Weight
Nielsen upgraded to Equal Weight on possible deal scenarios at Barclays
Barclays analyst Manav Patnaik upgraded Nielsen Holdings to Equal Weight from Underweight and raised his price target for the shares to $27 from $21. The analyst, who still believes Nielsen's prospects as a stand-alone public company "remain grim," sees limited downside in the stock now that activist investor Elliott Management has acquired an 8% stake. The analyst's new price target assumes a 60% likelihood of outright sale for $32 per share, with lower scenarios for just a Buy sale. He sees downside to $15 per share if no action is taken.
08/14/18
08/14/18
UPGRADE

On The Fly: Top five analyst upgrades
Catch up on today's top five analyst upgrades with this list compiled by The Fly: 1.Commercial Metals (CMC) upgraded to Neutral from Sell at Goldman Sachs with analyst Matthew Korn saying his prior initiation of the company at Sell in March was based on its "full valuation," but at its current price, the risk-reward on the company is more attractive. 2. Nielsen (NLSN) upgraded to Outperform from Neutral at Macquarie and to Equal Weight from Underweight at Barclays. 3. Alliance Data (ADS) upgraded to Overweight from Neutral at JPMorgan. 4. DCP Midstream (DCP) upgraded to Buy from Hold at Stifel with analyst Selman Akyol citing the company's Q2 results that were slightly above expectations. 5. JinkoSolar (JKS) upgraded to Neutral from Sell at Citi with the firm expecting the module outlook to improve in the second half of 2018. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.

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