With two attractive deals in the works, Vista Outdoor (New York Stock Exchange:VSTO) shareholders have “multiple ways to win,” prompting Roth MKM to upgrade the stock to Buy from Neutral.
In the first scenario, the Czechoslovak ace group, known as CSG, buys Vista's ammunition business, handing over to VSTO shareholders $12.90 per share in cash and one share of Revelyst.
If the deal with CSG is not accepted or fails to win CFIUS approval, VSTO shareholders still have a companywide offer of $37.50 per MNC share, what Roth MKM analyst Matt Koranda calls a “attractive in-the-money put option.” .”
“We see two bullish scenarios for VSTO stock and not as many significant downside risks,” Koranda said in Thursday's research note, adding that “both the improvement in Revelyst's standalone cash and increased supply from multinationals make us reconsider our rating.” In addition to the upgrade, Koranda raised his price target for VSTO by 23% to $38.
The only negative scenario for VSTO shareholders, Koranda thinks, is if the deal with CSG fails and the deal with MNC does not get board approval or if MNC is unable to raise the necessary financing.
