Nomura Securities Maintains a 'Reduce' on DIRECTV (DTV); Q4 Earnings Preview
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Price: $58.01 --0%
Rating Summary:
5 Buy, 22 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
5 Buy, 22 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Nomura Securities maintains a 'Reduce' on DIRECTV (NASDAQ: DTV) price target of $32.00.
Analyst, Mike McCormack, said, "DIRECTV’s 4Q results highlighted many of our concerns, and we continue to recommend investors reduce positions in the shares. We believe investors are paying a large premium for an intertwined extraordinary buyback and LatAm EBITDA growth story; meanwhile, we expect the trends of the U.S. business to deteriorate meaningfully. Incremental U.S. margins have turned negative, and with expectations for further deterioration throughout 2012, we see ~10% risk to longer-term consensus estimates. With margins being the currency to pay back SAC investments, which are also going higher, we think investors need to be mindful of the trajectory of the ROI of the subscriber base. We are concerned about DIRECTV’s strategy to “focus on retention” rather than growth and believe it adds considerable risk to the outlook for future free cash flow generation. Along with 4Q11 results, DIRECTV announced a new $6bn share repurchase authorization to be utilized in 2012. Given the evidence of change in the fundamentals of the business outlook, we believe investors should re-characterize DIRECTV’s financial engineering strategy as a risk rather than an opportunity. Our 2011/2012 EPS estimate goes to $3.48/$3.96 (from $3.32/$4.00)."
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 $45.38 yesterday.
Analyst, Mike McCormack, said, "DIRECTV’s 4Q results highlighted many of our concerns, and we continue to recommend investors reduce positions in the shares. We believe investors are paying a large premium for an intertwined extraordinary buyback and LatAm EBITDA growth story; meanwhile, we expect the trends of the U.S. business to deteriorate meaningfully. Incremental U.S. margins have turned negative, and with expectations for further deterioration throughout 2012, we see ~10% risk to longer-term consensus estimates. With margins being the currency to pay back SAC investments, which are also going higher, we think investors need to be mindful of the trajectory of the ROI of the subscriber base. We are concerned about DIRECTV’s strategy to “focus on retention” rather than growth and believe it adds considerable risk to the outlook for future free cash flow generation. Along with 4Q11 results, DIRECTV announced a new $6bn share repurchase authorization to be utilized in 2012. Given the evidence of change in the fundamentals of the business outlook, we believe investors should re-characterize DIRECTV’s financial engineering strategy as a risk rather than an opportunity. Our 2011/2012 EPS estimate goes to $3.48/$3.96 (from $3.32/$4.00)."
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 $45.38 yesterday.
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