Anika Begay
Citi re-established coverage on Liberty Global (NASDAQ:) with a Buy rating and a $25.00 price target on Friday. The firm highlighted the potential for significant value discovery in the near future due to strategic corporate actions.
The current discount on Liberty Global shares, which implies a negative asset value for its operating company holdings, is seen as an upside opportunity.
Liberty Global is expected to benefit from the upcoming Capital Markets Day (CMD) and the planned listing of its Swiss assets by the end of fiscal 2024. These events are expected to play a key role in demonstrating the underlying value of the company.
Despite challenges ahead in 2022 from rising interest rates, which have impacted highly leveraged telecom companies, Citi believes the trend could reverse as the credit environment improves.
The company’s operating companies (OpCos) have reported slight declines in subscriber numbers, but Liberty Global has managed to implement price increases to keep revenues stable. As OpCos continue to expand their fiber networks, improvements in key performance indicators (KPIs) are also expected.
Citi has initiated a 90-day Positive Catalyst Watch on the stock, marking the upcoming Sunrise CMD as a pivotal moment that could help alleviate the holding discounts currently reflected in Liberty Global’s valuation. This watch period indicates an increased expectation of positive developments that could impact the stock’s performance.
In other recent news, Liberty Global’s second-quarter performance was mixed, according to Bernstein SocGen Group, which maintained an Outperform rating on the company with a steady $24.70 price target.
The company noted that while revenues were weak in the UK and Belgium, they met expectations in other regions and EBITDA was strong in the Netherlands.
However, Liberty Global’s Free Cash Flow decreased 21% year-over-year due to higher capital expenditure in Belgium and Switzerland. Despite this, the company’s performance is seen as part of its transition phase to 2024.
In other developments, Liberty Global, a partner of Virgin Media O2, is planning a significant event, the Swiss spin-off, which is expected to be a major step in the company’s strategy. The company also reported a strong balance sheet with $3.2 billion in consolidated cash and $3.9 billion including liquid securities.
Virgin Media O2, on the other hand, reported a loss of 118,400 mobile contract customers in the second quarter, attributed to stagnation in innovation in the high-end market. However, the company’s expansion into fibre networks shows growth.
Finally, Virgin Media O2 reported a 1.4% drop in revenue for the quarter compared to the same period last year, to £2.7 billion. The decline was mainly due to weak performance in the mobile market.
As a result, adjusted core earnings fell 1.6% to £998m. These are some of the recent developments that investors should keep an eye on.
VscekPro Insights
As Liberty Global (NASDAQ:LBTYA) prepares for key strategic events, including the planned listing of its Swiss assets and an upcoming Capital Markets Day, VscekPro insights suggest several factors that could impact investors’ outlook. In particular, management’s aggressive share buyback program underscores confidence in the company’s value proposition. This is complemented by Liberty Global’s impressive gross profit margins, which stood at 67.19% over the trailing twelve months as of Q2 2024, reflecting operational efficiency and a strong competitive position in the market.
Additionally, the company is trading at a low price-to-book multiple of 0.38, which suggests that the stock may be undervalued relative to its net asset value. This is in line with Citi’s assessment of the potential for significant value revelation in the near future. While analysts do not expect profitability for the current year and the company has not been profitable in the last twelve months, the VscekPro platform offers additional guidance with 15 more VscekPro tips for investors seeking more in-depth analysis (https://www.investing.com/pro/LBTYA). These tips can provide additional insights into the company’s financial health and market position.
With a market cap of $6.98 billion and revenue growth of 3.96% over the last twelve months as of Q2 2024, Liberty Global is demonstrating its ability to grow despite market challenges. As investors and analysts look at the results of the company’s strategic initiatives, these data points and tips from VscekPro can provide valuable context to understand the company’s potential for future performance.
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