UBS 21-Jan-08 1 Buy Target $1.59 Following the announcement of a...

UBS 21-Jan-08 1 Buy Target $1.59
Following the announcement of a proposed separation of the MFS funds management business and Stella travel, the broker has analyzed three scenarios where it has valued Stella in its current capital structure and used different valuations for MFS funds.

Assuming an 80% chance of a scenario where MFS recurring earnings are valued at 2 times and a 20% chance of a scenario where MFS is valued at 0%, the broker has arrived at its valuation. This has resulted in the price target dropping sharply to $1.59 from $6.00.

The rating remains unchanged at Buy, no doubt a result of the heavy price fall last week.