Stifel ups Capital Senior Living to hold; maintains PT $8.50

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Stifel upgraded Capital Senior Living (NYSE:CSU) to “hold” from “sell” but maintained its price target of $8.50, saying the shares have overshot its fair value estimates. The stock closed at $8.34 on August 23.

“We believe the shares are interesting to long-term value investors and activists and a change in management is a potential catalyst,” writes analyst Chad Vanacore. “This is balanced by our expectations of further fundamental pressures on the company and the industry at-large.”

Mr. Vanacore said that while the company will miss Larry Cohen's leadership and industry knowledge, “we believe new management may be a potential catalyst for change as the company faces industry challenges.”

He said a change in management begs the question whether the company is a takeout candidate? “We think there are plenty of potential bidders for the real estate from private equity. Capital Senior Living is a digestible size and has a sizable portfolio of owned assets,” he added. The company owns about two-thirds of the roughly 12,000 units in its portfolio.  

Sydney Stewart