Gold prices steady ahead of Fed decision, Trump’s tariff deadline
On Monday, Seaport Global Securities began coverage on Starz Entertainment (NASDAQ:STRZ), assigning a Buy rating to the company’s shares with a price target of $30.00. Currently trading at $13.01, with a market capitalization of $217.27 million, the stock has shown strong momentum with a 16% return year-to-date. The firm highlighted the potential for significant value appreciation, noting that while they have set a $30 price target, the company’s strong free cash flow (FCF) conversion and debt reduction efforts could imply an average valuation of around $46 within the next year.
The analyst at Seaport Global Securities pointed out that Starz Entertainment’s shares are currently trading at a considerable discount compared to its linear network peers, with a notably low Price/Book ratio of 0.24. According to InvestingPro data, the company maintains a healthy gross profit margin of 46.84% despite current challenges. The firm attributes this undervaluation to market dislocation following a recent split. They believe that Starz Entertainment has a solid strategy for growing its target demographic subscriber base through original content, which is expected to lead to increases in average revenue per user (ARPU), EBITDA growth, margin expansion, and further FCF conversion and debt reduction.
Seaport Global Securities also suggested that, in the longer term, the valuation of Starz Entertainment could climb significantly higher, potentially reaching up to $46 and conceivably even around $56, as market sentiment improves and investors begin to distinguish between different business models within the sector.
Starz Entertainment is scheduled to report its earnings after the market closes on May 29. Seaport Global Securities had previously provided an analysis of Starz’s business model outlook in early April, laying the groundwork for their current coverage initiation and the optimistic valuation of the company’s stock.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.