Shares of Redbox parent Outerwall popped 12 percent early Monday before settling into a 4 percent gain in midday trading after Jana Partners disclosed it has taken a 14 percent stake in the company and that it is advocating changes to boost shareholder value.
Jana said in a regulatory filing late Friday that it holds 3.8 million shares of Outerwall, a company whose primary businesses are coin-counting machines and the Redbox DVD kiosks, and that it encourages management to cut costs, discontinue certain businesses or sell the entire operation in order to drive the stock higher.
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Outerwall, which used to be called Coinstar, also recently added a new business called ecoATM, which consists of kiosks where consumers can buy mobile phones and other small technological gadgets.
Jana is a hedge fund run by activist investor Barry Rosenstein, who has stakes in Groupon, Office Depot and other companies he deems undervalued.
On Monday, a couple of analysts weighed in with nearly opposite opinions. Piper Jaffray reiterated its “overweight” rating and said the stock should trade in the low $70-range, while on Friday it closed at $57.10.
On the other hand, the firm Monness Crespi Hardt reiterated its “sell” rating on the stock and $30 price target, arguing that the DVD rental business is in “irreversible decline.”
Outerwall said in a filing that it “welcomes the opinions of its shareholders and is always open to constructive input toward the goal of enhancing shareholder value.”
