Why Jefferies sees 35% upside in the HT&E (ASX:HT1) share price

The leading broker has chimed in with its view of the company’s share price.

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Shares in media and entertainment company HT&E Ltd (ASX: HT1) are sliding lower today and are now trading 5.44% down at $1.825 apiece.

HT&E shareholders have endured a bumpy ride these past few months but saw relief last week when the company’s share price made a sharp turn to post a new 6-month high.

Here we unravel what’s behind the move and what leading experts are saying on the outlook for HT&E investors.

What’s up with HT&E shares lately?

After a period of losses where the HT&E share price marched towards its 52-week low, the company advised last week that its contest with the Australian Taxation Office (ATO) is now over.

The company confirmed it had settled a long-standing tax dispute involving $195 million in tax adjustments, interest, and penalties for a New Zealand branch.

It agreed to pay a sum of $71 million after lengthy consultation with its advisors, acknowledging it was in the best interests of shareholders.

Shares in Here, There & Everywhere popped almost 31% on the day of the announcement. The company gallantly stated that investors can now look to HT&E’s future with more certainty.

Now that it has settled its dispute, how does this fare for the HT&E share price?

One leading broker has chimed in, lending its outlook on the future for the company’s shares.

What is Jefferies saying about HT&E share price?

According to analysts at investment bank Jefferies, the settlement bodes well for HT&E shares. Jeffries agrees the outcome is a good one for the entertainment company.

It said widespread consensus had baked in the entire $195 million liability with the ATO in forecasting HT&E’s earnings, not expecting this more favourable result.

Even the broker itself had included a $90 million assumption for the tax liability in its modelling — almost $20 million more than the eventual settlement.

Furthermore, it said “many investors would not consider investing in HT&E because of its complexity and the unknown quantum/timing of this [ATO] dispute”.

As such, the broker reckons the settlement will lift the veil of uncertainty for some investors who were perhaps hesitant on HT&E shares.

This, it believes, “will now open a much larger investor universe including possible corporate interest”.

From its updated modelling, the broker raised its price target on HT&E shares by almost 9% to $2.50 per share.

At current standing, this implies an upside potential of 35% for HT&E investors to clamp their teeth into.

HT&E share price snapshot

HT&E shares have climbed 23% in the last year and are around 1% in the red this year to date. That’s well behind the benchmark S&P/ASX 200 Index (ASX: XJO)’s return of about 25% in the past year.

Despite this, the company’s shares have rallied 12% in the past month and gained more than 21% in this past week of trading.

Should you invest $1,000 in HT&E right now?

Before you consider HT&E, you'll want to hear this.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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