UPDATE: Brean Capital Reiterates on DirecTV on Clearest Path to Upside
In a report published Friday, Brean Capital analyst Todd Mitchell reiterated a Buy rating on DirecTV (NASDAQ: DTV), and raised the price target from $82.00 to $85.00.
In the report, Brean Capital noted, “DirecTV beat 4Q13 estimates due to better-than-expected ARPU and lower-than-expected churn in the U.S. and a controlled deceleration in Latin America designed to mitigate financial exposure to economic volatility in the region. We expect DirecTV to generate similar results in 2014 and are projecting a 6% increase in consolidated revenue and an 8% increase in OPBDA. Moreover, we look for a 13% increase in FCF on an 8% drop in capital expenditure. We believe this will allow DirecTV to fulfill its $3.5 billion in targeted buybacks in 2014, which should translate to the highest capital returns in the group.
"With Comcast (CMCSA, $51.76, Buy) and TWC (TWC, $141.66, Hold) tied up by their proposed merger, the deal leaving the rest of the cable industry in disarray, and uncertainty surrounding DISH's (DISH, $57.07, Buy) plans for wireless, we think DirecTV offers the clearest path to upside in 2014. We are raising our target price for DTV to $85 from $82, and we reiterate our Buy rating.”
DirecTV closed on Thursday at $75.08.
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