UPDATE: Brean Capital Reiterates on DirecTV After Investor Meeting Affirms Positive Outlook
In a report published Friday, Brean Capital analyst Todd Mitchell reiterated a Buy rating on DirecTV (NASDAQ: DTV), and raised the price target from $74.00 to $82.00.
In the report, Brean Capital noted, “DirecTV held an investor meeting yesterday at which it reaffirmed its outlook for 2013-to-2016 consolidated revenue and OPBDA growth in the high single digits, and double-digit FCF growth, with capital expenditures expected to fall in both the U.S. and Latin America. We find management's plans to grow both U.S. and Latin America revenue while maintaining OPBDA margins and lowering capital expenditures credible, and believe this should allow DirecTV to maintain annual capital returns of $4 billion while keeping its investment grade status. We have updated our model, lowering our outlook for Latin America OPBDA, but more than matching it with a reduction in capital expenditures, for a net increase in FCF. We forecast 2016 consolidated revenue of $39.2 billion, OPBDA of $9.7 billion, and EPS of $8.00. Our price target of $82 is based on 20.0x 2016E FCF of $3.5 billion, discounted to NPV at 10%, or less than 7.5x 2014E EV/OPBDA and 7.0x 2014E EV/OPBDA. DirecTV is our top pick of the Cable and Satellite group.”
DirecTV closed on Thursday at $67.02.
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