Canaccord Genuity Maintains a 'Buy' on Virgin Media (VMED); Raising Estimates

June 14, 2012 8:19 AM EDT Send to a Friend
Get Alerts VMED Hot Sheet
Price: $51.00 --0%

Rating Summary:
    2 Buy, 10 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 27 | Down: 26 | New: 17
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Canaccord Genuity maintains a 'Buy' on Virgin Media (NASDAQ: VMED) be) new video (YouView) and broadband services (BT Infinity) in the UK, we price target of $33.00.

Analyst, Thomas Eagan, said, "VMED has been under pressure for the past few months due to concern that the increased competitive environment will significantly impact fundamentals. While true that there are (or will believe that VMED is well positioned to continue to take market share within its footprint. That, along with strong operating leverage, an improving balance sheet and continued share repurchases, should translate to an increasing trading multiple. VMED currently trades at 5.3x 2012E OCF (at the low end of US peers) and at a 12% FCF yield (at the high end of its US peers). We are increasing several of our Q2 and 2012 estimates."

"We are nominally increasing our revenue and OCF est (to £1.016bn and £407mm), slightly below CON, due largely to an increase in our ARPU est (from £48.15 to £48.49)...We are increasing our customer est but decreasing our RGU net adds est. Our more favorable customer est is due to higher Q4 gross adds offset by lower Q3 gross adds (due to the Olympics). Our lower RGU est is a function of continued Free TV churn offsetting continued TIVO gains. Re: Financials, our revenue and OCF est increase to £4.114bn and £1.650bn, respectively, slightly below CON. Our FCF est, however, declines to £441mm due to higher capex."

For an analyst ratings summary and ratings history on Virgin Media click here. For more ratings news on Virgin Media click here.

Shares of Virgin Media closed at $22.15 yesterday.


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