Shares Of The Pantry Up 10.5% Following Changes To The Board, Macquarie Upgrade

In a report published Wednesday, Macquarie Research analyst Dane Leone upgraded The Pantry (NASDAQ: PTRY) from Neutral to Outperform and raised the price target from $14.00 to $29.00 following recent changes to the Board of Directors and "overly discounted" assets.

Leone wrote, “Recent transactions in the convenience store industry provide a valuation basis for PTRY assets at the store level. In our view, the disparate clustering of PTRY assets has been a headwind to turning negative comps on the fuel business; however under a scenario where the assets are redistributed into an effective ‘dealer' network – or other strategic alternative – the value of the PTRY asset base could be much higher than current valuation.”

The analyst sees the valuation of The Pantry's assets is “overly discounted” compared with Susser Holdings and Hess transactions. Macquarie added that the company can increase EBITDA per store organically with QSR expansion.

Leone lowered 2014 estimated loss per share from $0.02 to $0.10 based on higher operating costs. Macquarie's 2015 and 2016 EPS forecasts were lowered from $0.29 and $0.41 to $0.21 and $0.32, respectively, to better reflect SG&A and D&A expenses.

Shares of The Pantry closed at $14.71 on Tuesday and are currently trading up 10.27 percent at $16.22.