Ascent Capital Group: Why Did Imperial Capital Reiterated An Outperform While Triming Its Price Target?

In a report issued Friday morning, Imperial Capital analysts Jeff Kessler and Saliq Khan reiterated an Outperform rating on Ascent Capital Group Inc

. However, they lowered their price target from $60 to $55 to better reflect "temporary headwinds due to certain pools of contracts coming due, which will cause the attrition to increase, as well as a material increase in the creation cost multiple (37x versus historical 34x)." The firm also trimmed its fiscal 2015 EPS estimate to -$2.81 from -$1.85, EBITDA to $369 million from $384.5 million, and revenue to $573.5 million from $578.7 million. Raymond James also lowered its fiscal 2016 EBITDA estimate to $408.9 million from $413 million. On the other hand, they increased their fiscal 2016 EPS estimate to -$1.23 from -$3.02. Finally, introduced estimates for fiscal 2017; they expect EPS of -$0.60, EBITDA of $444.6 million, and revenue of $659.7 million. Wonder what's the rationale behind this? According to the report, "ascent remains fundamentally strong and management reiterates it is not seeing any slowdown as a result of cable/telcos entering the Security space." The analysts think that "the attrition of the dealers will revert to the mean in the coming quarters, as well as continued increases in the take rate wireless interactive services and average revenue per user (ARPU)." They note that "self-generated leads by the dealer base have not been adversely affected as a result of the national media advertising from the competition."