FW: Broker urges Reed Elsevier to gear itself up

["Hamaker, Charles" <cahamake@uncc.edu>]

http://news.independent.co.uk/business/analysis_and_features/article2442
025.ece

Market Report: Broker urges Reed Elsevier to gear itself up
By Andrew Dewson
Published: 12 April 2007

"At first glance, there was nothing particularly exciting about 
Collins Stewart's latest "buy" note on the publishing group Reed 
Elsevier with a 667p target. However, the broker predicts that a 
private equity bid could value the shares at 85 per cent higher 
than yesterday's closing price of 619p, half a penny better.

The broker believes the market has not fully appreciated Reed's 
attractions to a bidder, and highlighted a free cash flow yield 
of 7.2 per cent, stable revenue growth and margins as well as its 
leading market position. Collins Stewart adds that, with a 
current debt weighting of just 1.4 times earnings, Reed is 
under-leveraged and if it does not gear up its balance sheet 
"maybe private equity will do the job instead". The broker 
estimates at a debt multiple of 8 times earnings the shares could 
be worth up to 1,147p."

Comment:

The broker is saying, I guess, if someone bought Reed Elsevier it 
would be worth a lot more than current market valuation.


Chuck Hamaker
Associate University Librarian Collections and Technical Services
Atkins Library
University of North Carolina Charlotte