Banc of America favors Interactive Corp. (IACI) spin-off.
Analyst Michael Savner says his sum-of-the-parts analysis yields over $30/share for all of InterActive. He values the non-travel business at about $11/share, plus $16 for Expedia, $7.25 in net cash and non-strategic investments equates to about $34/share.
He says the breakup significantly reduces complexity and allows management teams to be more focused. Although there are concern the online travel business is still broken, he thinks the market is already implying a dire scenario for the company's travel business, and implied value should still be higher than it is.
Savner says $29 12-month target is based on a combination of discounted cash flow and price/free-cash-flow.