Key Points
- Starz Entertainment Corp's stock surged over 7% after Raymond James upgraded its rating to Strong Buy.
- The upgrade was based on attractive valuation following Q3 results, with a 28% decline from the July peak.
- Raymond James expects Starz to maintain its stable operating performance and reduce leverage, supporting a 6% CAGR in OIBDA by 2028.
Why Starz Stock Surged After Raymond James Upgrade
Starz Entertainment Corp's stock surged over 7% after Raymond James upgraded its rating to Strong Buy, citing attractive valuation following Q3 results. The upgrade was based on the company's stable operating performance and reduced leverage, which Raymond James expects to continue.
Starz has seen a 28% decline in its stock price from the July peak, but Raymond James believes this presents an attractive opportunity for investors. The company's digital and over-the-top (OTT) segments now account for over 70% of its revenue, providing a solid foundation for future growth.
At a Glance
| Company | Starz Entertainment Corp NASDAQ:STRZ |
| Analyst | Brent Penter Raymond James |
| Rating | Strong Buy Upgraded from Outperform |
| Target Price | $36 Increased from $35 |
| Q3 Revenue | $322.4 million Up 100% YoY |
| OIBDA | $44.2 million Up 100% YoY |
| Cash and Cash Equivalents | $86.8 million As of Q3 |
Behind the Upgrade: What Raymond James Sees in Starz
Behind the Upgrade: What Raymond James Sees in Starz
Raymond James' Brent Penter believes that Starz is undervalued, with a price-to-OIBDA ratio of 4.3 times. He expects the company to maintain its stable operating performance and reduce leverage, supporting a 6% CAGR in OIBDA by 2028.
Starz' management has reaffirmed its targets for 2026, including a 10% increase in OIBDA and a 20% increase in OTT revenue. The company also expects to reduce its leverage to 2.5 times by the end of 2027.
What Investors Should Know About Starz Stock
What Investors Should Know About Starz Stock
Investors should note that Starz' stock has surged over 7% following the upgrade to Strong Buy. However, the company's valuation is still attractive, with a price-to-OIBDA ratio of 4.3 times.
Investors should also be aware of Starz' targets for 2026, including a 10% increase in OIBDA and a 20% increase in OTT revenue. The company's reduced leverage and stable operating performance provide a solid foundation for future growth.
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