Market Overview

Morgan Stanley Upgrades Liberty Global, Says Lightning Has Struck

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After multiple years of deceleration in revenue growth, one Wall Street analyst is now "cautiously optimistic" Liberty Global plc - Class A Ordinary Shares (NASDAQ: LBTYA) can reverse this trend in 2018 and beyond.

The Analyst

Morgan Stanley's Benjamin Swinburne upgraded Liberty Global's stock from Underweight to Overweight with a price target boosted from $38 to $42.

The Thesis

Liberty Global said in late 2015 it plans on building out four million new cable households in the United Kingdom, but its plans suffered some setbacks and management changes, Swinburne said in a note. But after a few years of "hiccups" there's now reason to be "cautiously optimistic" that 2018 will see revenue growth in the UK which in turn will generate EBITDA growth.

So far the company has already constructed 1.1 million HHs in the UK and a new management team in place could result in the company achieving its goal of building out an additional four million HHS through 2021, Swinburne said. Coupled with expectations for growth in Germany, it's second largest market, could prove to be primary drivers of growth in 2018 and 2019.

Price Action

Shares of Liberty Global closed down 4 cents at $36.52.

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