Piper Jaffray Downgrades China Digital TV (STV) to Neutral; Long Term Opportunity Unchanged, Near-Term Visibility Low

November 11, 2009 7:28 AM EST

Piper Jaffray & Co. downgrades China Digital TV (NYSE: STV) to Neutral. Price target lowered from $11 to $8.

Piper analyst says, "China Digital TV reported Q3 EPS of $0.08, below the Street at $0.10; Q3 revenue was $12.1m, also below the Street at $12.6m. The company indicated that it shipped 1.96m smart cards in the quarter; this compares to its forecast of 1.85m to 2.25m total smart cards in Q3. The issue is both competitive, which resulted in lower ASPs, and market slowness as service providers delay plans to shift to digital with the China TV market in the midst of possible consolidation and fee changes...China Digital TV guided for Q4 revenue of $12.5m-$13.6m, 9% below Street consensus revenue of $14.3m. The company also indicated that it expects Q4 smart card shipments of 2.2m to 2.4m. This implies total CY09 smart card shipments of about 8.8m, below the original forecast of about 11.8m smart cards. We note that the company revised its expectation following lower than expected shipments in Q2, so this does not come as a surprise.

"We continue to believe China Digital TV is well positioned for long-term growth in China's digital cable market over the next several years. And we believe the question of smart card demand is "when?" not "if?". But we expect the challenging environment will persist into 2010. The company indicated that operators are delaying the digital transition due to uncertainty in the China TV market with possible consolidation and fee changes for paid TV."

To see more analyst ratings on STV Click Here.

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