Pivotal Research weighed in on the possibility of a deal between between DirecTV (NASDAQ: DTV) and AT&T (NYSE: T).
According to the research report, there is a 15 percent chance the deal will not be approved.
“U.S. competition will be reduced from 4 to 3 players in a period of consumer Pay-TV rates rising materially faster than inflation.”
The note further states if the deal is not approved, DirecTV will fall to the mid $70 level (about 17.6 percent downside).
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Other risks to DirecTV include increasing competition, Latin America contributing a large amount of earnings, NFL contract repricing and rising content costs.
The $90 price target is based on the buyout with a five percent reduction to AT&T’s current price.
Shares of DirecTV were last trading 0.5 percent lower to $84.75.
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