Citigroup’s Equity Research unit (NYSE: C) initiated coverage of Graham Packaging Co (NYSE: GRM) with a “Buy” rating and a $15.00 price target, citing the company’s focus on specialty end markets “where its technology helps to drive differentiation.”
Citi analyst Timothy Thein said, “Based on our forecast for moderate EBITDA growth, and continued solid cash flow conversion, Graham shareholders stand to benefit from substantial value creation driven by de-leveraging. Combining our outlook of modest EBITDA growth and ~$435MM in cumulative free cash flow generation through 2012, we see this equating to an implied 2012E year-end equity value of ~$22.15, equal to a ~25% CAGR from current levels. This example conservatively assumes no change in EBITDA multiple from current levels, which could drive additional upside.”
Citigroup sees a FYI 2011 earnings per share of $1.75.
