Liberty Media Interactive (LINTA)

We maintain our under-performer rating on Liberty Interactive (LINTA). We now think the consumer-led economic slowdown will continue to stifle the company's earnings growth well into 2009, with little visibility to improvement other than easing comps.

When the economy turns, we expect Liberty Interactive to accelerate EPS growth to a mid-teens rate and maintain it for several years, driven by QVC. Indeed, despite QVC s challenging retail environment, Liberty Interactive posted 2% revenue growth, albeit with declining margins. Also driving the growth is Liberty's e-commerce business, which currently is doubling its revenue and OIBDA year over year.

Neverthess, at 14.0x our 2010 EPS estimates, we think the stock is richly valued, presenting a poor risk/reward proposition in a climate of murky earnings visibility with potential earnings estimate cuts more likely than increases.

Liberty Media Interactive (LINTA) : FULL ANALYST REPORT

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