UPDATE: Citigroup Downgrades Meredith on Unfavorable Risk-Reward

In a report published Wednesday, Citigroup analyst Jason B. Bazinet downgraded the rating on Meredith (NYSE: MDP) from Buy to Neutral, but raised the price target from $44.00 to $48.00.

In the report, Citigroup noted, “Meredith's equity has appreciated as investors assign higher probabilities to management either divesting publishing assets and/or acquiring TV station assets. These outcomes are possible – even likely – in our view. However, with the recent run-up in the equity, we no longer see a favorable risk-reward. As such, raising our price target from $44 to $48 but downgrading from Buy to Neutral. We see modest upside per share if Meredith acquires more TV stations. While it will be difficult for Meredith to acquire many of the publicly traded TV station groups without exceeding 3x debt-to-EBITDA, there are many private firms that Meredith could acquire while maintaining its investment grade rating. And, given Meredith's lean balance sheet, these transactions are apt to be accretive to pro forma EPS boosting Meredith's equity value.”

Meredith closed on Tuesday at $48.52.