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On Tuesday, Benchmark analysts adjusted their outlook on Liberty Global (NASDAQ:LBTYA) shares, reducing the price target to $18.00 from the previous $27.00. Despite the decrease, they maintained a Buy rating on the stock. According to InvestingPro analysis, the stock appears undervalued at current levels, trading near its 52-week low of $10.82. The revision reflects the current state of European equity markets and the completion of the Swiss Sunrise spinoff, which is estimated to impact the stock by approximately seven points per share.
The analysts believe that Liberty Global’s shares are undervalued when considering conservative European and UK telecom industry benchmarks. The company maintains impressive gross profit margins of 67.5% and has achieved revenue growth of 3.5% over the last twelve months, despite challenging conditions. While operational performance continues to be restricted by the economic environments in Europe and the UK, the company maintains a healthy current ratio of 1.19. In the long term, they expect Liberty Global to benefit from its comprehensive in-house quad play networks across its markets, excluding Slovakia.
Benchmark’s revised price target of $18 for 2025 is based on a forecast model extending through 2027. The model takes into account price-to-earnings (P/E) ratios for European market indices, which tend to be lower than those used for U.S. market services operators, particularly when compared to the S&P 500. The analysts highlighted that the valuation could be particularly conservative in light of potential equity value realization from the VodafoneZiggo joint venture in the Netherlands. They estimate that the equity value of this joint venture barely exceeds the proportionate share of its debt, suggesting a significant upside potential for the stock.
In other recent news, Liberty Global has been the subject of various analyst revisions. Bernstein analysts downgraded Liberty Global shares to Market Perform, citing concerns over mixed operating trends and capital expenditure risks at VodafoneZiggo. The firm set a new price target of $12.40, factoring in the recent spin-off of Liberty Global’s Swiss operation.
Similarly, BofA Securities downgraded Liberty Global from Neutral to Underperform, setting the price target at $12.60. This downgrade followed the completion of Liberty Global’s strategic initiative involving the spinoff of Sunrise, with the firm noting that remaining strategic initiatives carry greater execution risk.
Deutsche Bank (ETR:DBKGn) also adjusted its price target for Liberty Global to $23.00, retaining a Buy rating. The new target price reflects the value of Liberty Global’s shares excluding the Sunrise portion, which was previously incorporated into the overall target.
Lastly, UBS shifted its rating from Buy to Neutral, reducing the price target to $13 in response to the company’s recent business changes. Liberty Global’s portfolio now primarily consists of a 50% stake in Virgin Media O2 in the UK, Telenet in Belgium, and a 50% stake in VodafoneZiggo in the Netherlands, alongside a $3 billion Ventures investment portfolio. The company has expressed intentions to potentially list these assets on local exchanges over time and to strategically manage the capital within its Ventures portfolio. These are among the recent developments for Liberty Global.
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