EVT shares rise as Citi upgrades stock to 'buy'
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The news: Citi analysts have upgraded their rating on EVT despite the entertainment and hospitality group reporting a slide in first quarter earnings.
The numbers: Citi lifted its rating on EVT to ‘buy’ from ‘neutral’. Shares in the company are up nearly 5% to $11.34 in early trading.
The context: The Event Cinemas and Rydges Hotel owner last week reported a sharp drop in June quarter earnings amid poor weather at its Thredbo resort and a weak lineup of movies affecting results at the cinema chain.
However, Citi analysts argued the company’s share price, which has been flat over the last 12 months, does not appropriately reflect both the fair value of property and the operating businesses due to a lack of transparency, earnings volatility higher than average amount of non-recurring items.
What they said: “We upgrade to buy, as we have recently detected signs from the company suggesting appetite for change may be building, including the hotels segment being prioritised for growth (suggesting cinemas could be non-core) and comments from the chairman at the AGM indicating he is keen to see a higher share price (and dividends),” the analysts said in a note.
The source: Citi research
