Kaufman Bros. Upgrades Cablevision Systems (CVC) to Buy; Sees Successful Spin-out of MSG

November 2, 2009 7:14 AM EST

Kaufman Bros. upgrades Cablevision Systems (NYSE: CVC) from Hold to Buy. Price target increased from $21 to $28.

Kaufman analyst says, "We are modestly below consensus estimates in our outlook for Cablevision. We look for Cablevision to report 3Q09 total revenue of $1.83 billion (up 5% y/y), total EBITDA of $581 million (up 1% y/y), and EPS of $0.25 (up from $0.09 a year ago). Our estimate is based on a 5% increase in Telco (Cable) segment revenue and EBITDA, and a 5% increase in Other revenue and an 11% decline in Other EBITDA. Consensus for the quarter is for total revenue of $1.82 billion, total EBITDA of $589 million and EPS of $0.26. We look for Cablevision to report 2009 total revenue of $7.76 billion (up 7% y/y), total EBITDA of $2.43 billion (up 6% y/y), and EPS of $0.90 (up from a loss of $0.78 in 2008).

"Cablevision's 3Q09 subscriber metrics should benefit from an easy comp...Our $28 price target for
shares of CVC is based on the successful spin-out of MSG and resulting expansion in FCF forecasts as a result. We assume MSG negatively impacts FCF by approximately $200 million annually. Separating these assets at a valuation of roughly $1.3 billion, would result in a conservative 20%+ increase in 2011E FCF to over $750 million from our estimate for consolidated 2010 FCF $570 million."

To see more analyst ratings on CVC Click Here.

Cablevision Systems Corporation operates as a telecommunications, media, and entertainment company.

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