DirecTV (DTV) Poised to Gain as LatAm Continues Expansion
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Latin America is becoming an increasingly important market for DirecTV (NYSE: DTV), due in part to rapid growth last year led by the 2010 World Cup.
DirecTV increased its subscriber base in LatAm by 1.2 million in 2010, nearly doubling its total base in the region from two years earlier. Central and South America now add about 15 percent to DirecTV's operating earnings. Some believe the region could contribute about 30 percent to operating earnings within the next few years, making recent FY12 EPS estimates of $3.26 slightly obsolete.
LatAm saw a 43 percent increase in sales last year and a 74 percent gain in operating profits. Total earnings climbed 44 percent as a result.
Though competition comes from the likes of Dish Networks (Nasdaq: DISH) and local providers, DirecTV is bigger in rural areas of LatAm. Barron's notes less than one-quarter of the region's potential customers are wired for pay TV, and generally the area gets only analog signals. DirecTV's high-definition option may also appeal to those who are true sports fans, and want to feel like they're at the match.
Kaufman Bros is looking for the price to rise to $57 this year, while Deutsche Bank expects a slightly higher $58. Both estimates are about 20 percent better than today's trading range. Further, bulls on the stock are looking for earnings growth of 40 percent over the next two years, compared with 30 percent as a general Street consensus.
DirecTV also has a buyback program in place that could reduce the number of outstanding shares by 20 percent over the next one to two years.
On the report, DirecTV shares are 0.4 percent better Monday.
DirecTV increased its subscriber base in LatAm by 1.2 million in 2010, nearly doubling its total base in the region from two years earlier. Central and South America now add about 15 percent to DirecTV's operating earnings. Some believe the region could contribute about 30 percent to operating earnings within the next few years, making recent FY12 EPS estimates of $3.26 slightly obsolete.
LatAm saw a 43 percent increase in sales last year and a 74 percent gain in operating profits. Total earnings climbed 44 percent as a result.
Though competition comes from the likes of Dish Networks (Nasdaq: DISH) and local providers, DirecTV is bigger in rural areas of LatAm. Barron's notes less than one-quarter of the region's potential customers are wired for pay TV, and generally the area gets only analog signals. DirecTV's high-definition option may also appeal to those who are true sports fans, and want to feel like they're at the match.
Kaufman Bros is looking for the price to rise to $57 this year, while Deutsche Bank expects a slightly higher $58. Both estimates are about 20 percent better than today's trading range. Further, bulls on the stock are looking for earnings growth of 40 percent over the next two years, compared with 30 percent as a general Street consensus.
DirecTV also has a buyback program in place that could reduce the number of outstanding shares by 20 percent over the next one to two years.
On the report, DirecTV shares are 0.4 percent better Monday.
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