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Colony Shares Upgraded to Buy

LOS ANGELES—The company's 3Q14 earnings reports are above analysts' expectations, prompting the upgrade with estimation that shares will hit $27, up from $22.50, due to the combination of Colony Capital and Colony Financial, GlobeSt.com reports in this UPDATE to a previous story.

By Kelsi Maree Borland | Updated on November 06, 2014

LOS ANGELES—Sterne Agee has upgraded Colony Financial stock from neutral to buy after the company released strong 3Q14 reports and announced plans to combine with Colony Capital. GlobeSt.com reported the possible management combination yesterday, noting that the deal is valued at $675 million. In response to the announcement, Jason Weaver, an analyst with Sterne Agee, has raised 4Q14 estimates to $27 per share, up from $22.50.

“I really haven’t changed much about my expectations for the fourth quarter at this point. I think that the results will probably be a little bit better than I had previously expected, but the big news here is obviously the prospective combination,” Weaver tells GlobeSt.com. “I think it is really a transformative event for the company; going from being a commercial mortgage REIT to a commercial mortgage REIT that owns its own asset management company is pretty powerful from a valuation perspective—what you can value the stock at in a secondary market.” Weaver calls his $27 price target a “conservative estimate,” adding that we will really have to see if the deal actually goes through.

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