NEW YORK (TheStreet) -- Shares of Interval Leisure Group (IILG) closed up by 4.38% to $17.87 on Thursday, as the stock was upgraded to "buy" from "neutral" at MKM Partners this morning. The firm raised its price target on the company to $25 from $16.50.
After completing the merger with Vistana in May, the firm believes Interval Leisure is "poised for an acceleration in earnings growth and FCF." MKM also thinks the company has a "strong" balance sheet that will provide "good visibility into unlocking value over a multi-year period."
MKM forecasts FCF of $250 million-$300 million over the next few years and says it "could deserve a premium to peers" based on growth opportunity, its business diversification, and its upscale brands. "IILG arguably has the strongest array of upscale brands in the industry in Hyatt, Westin, and Sheraton with access to Starwood's SPG program and Hyatt's Gold Passport program.
The firm says Interval Leisure should receive a boost in the second half of the fiscal year from "improving industry and company metrics," as well as "corporate actions by peers."
The Miami-based company provides membership and leisure services to the vacation industry.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate INTERVAL LEISURE GROUP as a Hold with a ratings score of C+. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and disappointing return on equity.
You can view the full analysis from the report here: IILG