Nomura Securities Maintains a 'Reduce' on DIRECTV (DTV); Still Concerns Over Latin America

August 3, 2012 8:35 AM EDT Send to a Friend
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Nomura Securities maintains a 'Reduce' on DIRECTV (NASDAQ: DTV) price target of $34.00 (from $32.00)

Analyst, Mike McCormack, said, "DIRECTV’s 2Q results featured better US results, but we remain concerned about the company’s Latin American growth strategy. From our perspective, DIRECTV’s share repurchase strategy hinges on the company’s ability to leverage the Latin American asset, as the US asset is already at 2.8x Net Debt/EBITDA. DIRECTV’S US operations reported net subscriber losses of (52k), the company’s first ever losses, putting a dent in the company’s long-term growth thesis even though margins were better than expected. Latin American net additions of 645k and churn of 1.80% impressed, but constant currency ARPU declines of 2.3% disappointed. Given the company’s improved US operations and ARPU growth, we are raising our 2012 US Revenue and EBITDA forecasts to $23.2bn and $5.6bn from $23.1bn and $5.5bn. We are also raising our Latin American revenue forecast to $6.3bn from $6.2bn and lowering our EBITDA forecast to $1.8bn from $1.9bn."

1Q12E EPS from $1.06 to $1.07; 2Q12E EPS from $1.15 to $1.09; 3Q12E EPS from $0.94 to $1.01; 4Q12E from $1.08 to $1.00; FY12E from $4.24 to $4.16

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

Shares of DIRECTV closed at $48.80 yesterday.




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