UPDATE: Morgan Stanley Reiterates on DirecTV Following Company Investor Day
In a report published Friday, Morgan Stanley analyst Benjamin Swinburne reiterated an Overweight rating on DirecTV (NASDAQ: DTV), but removed the $70.00 price target.
In the report, Morgan Stanley noted, “Management guided to $8 of FCF/share and EPS in 2016, +15% and +8% above MSe respectively. If the market were to price in these expectations, we believe our $90 bull case becomes more realistic and supports our OW rating. DTV's US cash flow outlook (EBITDA less capex) was well ahead (+$600M vs. MSe), driven by stronger top-line growth, lower subscriber acquisition costs, and lower capital intensity. Given the dynamics of the US pay-TV market – mature and highly competitive – DTV's relatively bullish US rev forecast is likely the most significant delta vs. consensus. DTV-LatAm's cash flow outlook (EBITDA less capex) was ~$100M behind MSe (in-line vs. consensus) with better sub growth more than offset by assumed currency headwinds.”
DirecTV closed on Thursday at $67.02.
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