Barnes & Noble: Misunderstood Turnaround And Potential Breakup Play Has Up To 80% Upside
- Barnes & Noble stock has underperformed the market in recent weeks, despite a much-improved 1Q earnings report in early September.
- The SoTP case has been discussed previously and remains more convincing than ever; with management now focused on breaking up the company, this should be a value driver near term.
- Even assuming a substantial negative valuation for the NOOK business, SOTP suggests 11-80% upside to the stock from current prices ($20).
- Even in the 'worst-case' scenario of no breakup, the massive improvement in NOOK performance is being overlooked and suggests you can buy the consolidated entity at 5-year trough valuations.
- Un-utilized NOLs and a potential cut in deferred revenue owed to Microsoft present additional 'wild-card' value drivers.