Deutsche Bank Upgrades Teekyay To Buy, Increases PT To $90


In a research report released today, Deutsche Bank analyst Amit Mehrotra upgraded shares of Teekyay Corp. (NYSE:TK) to a Buy (from a Hold) and increased his price target to $90 (from $68), which represents a 54.2% upside from where the stock is currently trading.

Mehrotra wrote, “The revision reflects the company’s bold new dividend strategy outlined after today’s market close and ahead of its analyst day tomorrow. The new plan includes an 80% increase in its annual dividend effective 1Q15 (to $2.25 at the midpoint vs. $1.265 today), and a policy aimed at linking future div increases to cash flow growth at its two MLP subsidiaries. The result should be 20%/year grow in TK’s dividend for the foreseeable future, which together with today’s increase, easily justify a $90+ share price in the relatively near-term.”

The analyst continued, “As we discussed in our initiation note from mid-September, we did see potential for TK to announce a significantly higher dividend at its analyst day on Sept 30, though our mid-term expectation was in the $2.00+ range. Today’s announcement implies a mid-term (2016) dividend of $2.70, with the difference translating to ~$23/share of upside to our earlier $68 price target at a 3% yield (hence our revised $90 target). Longer-term (2018), we see potential for annual dividend to reach $3.90/share, which at a 3% yield would translate to a $130 share price ($100 npv discounted back 3 years @ 10%/yr).”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Amit Mehrotra has a total average return of -3.4% and a 40% success rate. Mehrotra is ranked #2817 out of 3326 analysts.

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