Jefferies Maintains Hold, $27 PT on Virgin Media

Jefferies reiterates its Hold rating and $27 price target on Virgin Media

as the company's capex upgrade reinforces threats to its operating level model. Jefferies says, "VMED has announced a £110m (15%) upgrade to 2012 capex guidance. BB speeds will be doubled over the next 18 mths. The company hopes the enhanced product will create scope for price increases, but for the moment customers will not pay more. Expect consensus 2012e FCF to drop from £553m (+13% y/y) to £480m (-2%). Refocuses attention on competitive threats squeezing VMED's operating leverage model, risks to post-2012 buyback expectations." VMED closed at $22.85 per share on Wednesday.