Piper Jaffray Downgrades Outerwall Inc. (OUTR) to Neutral

Piper Jaffray downgraded Outerwall Inc. (NASDAQ: OUTR) from Overweight to Neutral with a price target of $32.00 (from $57.00) following Q4 results and a lowered CY16 outlook.

Analyst Michael Olson commented, "Outerwall reported Q4 EPS of $1.43 on revenue of $527.2M, ahead of previously lowered guidance and above the Street at $0.68 on $512.3M. Outlook for 2016, however, is materially below consensus; the company anticipates EPS for CY16 of $5.00-$6.30 vs. consensus of $7.14. The Q1'16 title slate incorporates a y/y increase in box office revenue of 16% (vs. our analysis of a 14% increase). We are now modeling a 25.9% y/y decline in rentals/kiosk in Q1'16 and 17% decline for CY16. Redbox faces secular headwinds, and while we do not expect a "fall off a cliff" scenario, we believe the trend is accelerating and will continue to drive y/y revenue and EPS decline. Outerwall expects to return 75-100% of FCF to shareholders in 2016, which is not fully reflected in guidance or estimates. Lowering rating to Neutral and PT to $32 based on 6x 2017E EPS."

The firm cut FY 2016 EPS from $7.60 to $5.74.

For an analyst ratings summary and ratings history on Outerwall Inc. click here. For more ratings news on Outerwall Inc. click here.

Shares of Outerwall Inc. closed at $32.69 yesterday.

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