Now May Be The Time To Buy Liberty Media, Deutsche Bank Says

In a report published Tuesday, Deutsche Bank analyst Bryan Kraft upgraded the rating on

from Hold to Buy, while raising the price target from $43 to $46. Liberty Media's discount to NAV had widened to 17 percent, from 9 percent a year ago, prior to the Broadband spin-off, even though the company now had a "more focused portfolio," analyst Bryan Kraft said. While the absence of a catalyst could discourage investing into "a narrowing discount story," there are catalysts for Liberty Media, "although they appear to be 1-2 years away," Kraft added. "This might seem like a long horizon to some, but we see a certain inevitability to how this will play out. Essentially, we think accretion in Liberty's Sirius ownership from Sirius' repurchase program will drive an elimination of the discount over time," the Deutsche Bank report stated. Liberty Media is estimated to own 58 percent of the fully-diluted shares of

, and this is expected to expand to 65 percent in a year and to 71 percent in two years. "This assumes $2.4B in repurchases during each of 2015 and 2016, and $2B in 2017 and 2018," Kraft wrote. The analyst also expects Sirius' shares to appreciate by around 10 percent annually. "In late 2018, Liberty's ownership should cross the 80% threshold required for tax consolidation," which would make Liberty eligible to receive cash dividends tax-free and "use the cash to repurchase Liberty shares," the report explained.