Investment analysts at Jefferies have looked at Liberty Global and adjusted its model for the company – taking into account recent news from Poland, Switzerland and the UK – and rates the company a ‘BUY’.
The bank states: “We update estimates, mostly for the shift of Poland into discontinued operations from 3Q21s onwards. On an underlying basis, before marking-to-market Foreign Exchange and the removal of Poland, the changes are not material.”
“In the UK, we expect again solid intake (+25,000 fixed customer net adds, vs consensus at +21,000 and 2Q21 at +22,000) as the effects of the price increase earlier in the year fade and the back-to-school period supports intake in student accommodation. We also expect a return to revenue growth,” adds Jefferies.
“Among the other units, the main item to highlight in Switzerland where we are -2 per cent vs consensus EBITDA – this likely reflects a more aggressive assumption on the cost of synergy capture,” suggests Jefferies. “A key debate into Q3 is if and how management talks about UK strategy, in particular the issue of footprint expansion beyond “Project Lightning” and potential wholesale [revenues]”.
Despite the ‘BUY’ recommendation to clients, Jefferies says that Liberty’s equity case is complex and “still suffers from some strategic uncertainties, and operational trends remain mixed.”
Jefferies gives a target share price of a slightly reduced $35.5 (down from $36.4), adding: “Still, even on cautious operational forecasts, [estimated free cashflow] should double over a three-year horizon, underpinned by material but realistic deal synergies, and driving a 19 per cent EFCF yield by 2024e.”