UBS Starts Tyco International (TYC) at Sell

UBS initiated coverage on Tyco International (NYSE: TYC) with a Sell rating and a price target of $40.00. Analyst Shannon O'Callaghan thinks positives are backed-in.

"Tyco's 3-year EPS guidance for a 12%-15% EPS CAGR from FY16-18 assumes that 100% of free cash flow is deployed in dividends and buyback. While the company has clearly indicated its preference for M&A, deal timing is difficult to forecast so we think the buyback assumption functions as a way to show the market that the company will not sit on cash. This assumption seems reasonable to us but typically free cash flow targeted to M&A would not be included in guidance but would rather exist as potential upside to guidance. In Tyco's case, we think the potential upside seems largely reflected in guidance and consensus already via the buyback assumption," said O'Callaghan.

For an analyst ratings summary and ratings history on Tyco International click here. For more ratings news on Tyco International click here.

Shares of Tyco International closed at $42.13 yesterday.

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