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In a report published Thursday, Morgan Stanley analyst Benjamin Swinburne resumed coverage on
Liberty Global plcLBTYA with an Overweight rating and $56.00 price target.
In the report, Morgan Stanley noted, “Our thesis on Liberty Global is based on the two central tenets of its investment thesis: 1) mid-single digit organic revenue and EBITDA growth, levered through its capital structure and tax position into 2) ~18% annual FCF/share growth from '15-'17E. Assuming shares trade ~16x fwd. fully taxed FCF at YE17,versus ~18x today, we believe shares should reach $56 by YE15, or ~20% upside from here. On a reported basis,expected pro forma rebased EBITDA growth of 5-6% in '15E is negatively impacted by FX headwinds of ~900 bps using current spot rates. Nevertheless, we believe shares can outperform, as we see upside to organic growth expectations in '15E, and a year-long pause in major M&A will help shine a light on the strong organic levered equity opportunity for investors. Our bull case has upside of ~40%,versus a bear case of ~30% downside.”
Liberty Global plc closed on Wednesday at $47.84.
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