On Thursday, Bernstein analysts downgraded Liberty Global shares (NASDAQ:LBTYA) to Market Perform from Outperform, adjusting the price target to $12.40 from the previous $24.70. Despite current challenges, InvestingPro data shows the company maintains impressive gross profit margins of 67.5% and receives a "GOOD" overall Financial Health Score. The revision reflects concerns over mixed operating trends and capital expenditure risks at the cable-only operation VodafoneZiggo. The new price target takes into account the recent spin-off of Liberty Global’s Swiss operation, which was previously included in the valuation.
The stock currently trades at a 16.4x 2025 estimated enterprise value to operating free cash flow (EV/OpFCF) on a proportionate basis, at a price of $11.70. The updated price target of $12.40 corresponds to a 17.0x multiple of the projected 2025 EV/OpFCF. According to InvestingPro’s Fair Value analysis, Liberty Global appears undervalued at current levels, with the stock trading 46% below its 52-week high of $21.56. Analysts noted that the decrease in the price target also stems from slightly lowered operating expectations across all operations, resulting in minor reductions to local-currency forecasts over the projection period.
The analysts also highlighted that Liberty Global’s management is actively working on a program of value realization. The initial phase of this program, the spin-off of the Swiss operation, was completed in December. While the full impact of this move is yet to be determined, further strategic actions are anticipated. InvestingPro subscribers can access a comprehensive analysis of Liberty Global’s strategic initiatives, financial health, and future prospects through the exclusive Pro Research Report, along with additional ProTips about management’s share buyback program and profitability outlook. According to management, upcoming steps include the separation of the UK NetCo and potential strategic actions thereafter, as well as the establishment of a Benelux entity.
In other recent news, Liberty Global has completed the spin-off of its Swiss operation, Sunrise, a move anticipated to unlock significant value for shareholders. The company expects nearly $5 billion in total returns for the year, driven by operational progress with Virgin Media O2 in the UK and fiber rollout partnerships in the Benelux region. BofA Securities downgraded Liberty Global’s stock from Neutral to Underperform, citing greater execution risk in the company’s remaining strategic initiatives following the Sunrise spin-off. Deutsche Bank (ETR:DBKGn) and UBS also adjusted their ratings for the company, with Deutsche Bank lowering its price target for Liberty Global stock to $23 from $38, but maintaining a Buy rating, and UBS shifting its rating from Buy to Neutral. These recent developments reflect the changes in Liberty Global’s business landscape and the potential impacts on its share price.
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