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On Apr 16, 2014, we issued an updated research report on Liberty Global plc. (LBTYA - Analyst Report).

Except for the last quarter, Liberty Global has delivered negative earnings surprise in all the three quarters last year, with an average beat of negative 63.53%. The company reported mixed financial results for the fourth quarter of fiscal 2013 with the bottom line beating the Zacks Consensus Estimate but the top line missing the same.

In the coming years, we expect Liberty Global’s revenues to benefit from a ‘triple play’ of video, broadband, and telephone offering, as it signs up more “bundled” customers in Europe and Latin America. At the end of the fourth quarter of 2013, Liberty Global had approximately 2 million TiVo Inc. (TIVO - Analyst Report) platform-based video subscribers with a quarterly net addition of 200,000 subscribers.

In Jun 2013, Liberty Global completed the full acquisition of the British cable MSO, Virgin Media. The takeover places Liberty Global as the largest cable TV MSO (multi service operator) in the world. In the U.K., the merged entity poses serious competitive threat to British Sky Broadcasting Group plc and BT Group plc. (BT - Snapshot Report).

Notably, Virgin Media decided to offer the video-subscription service of the online video streaming service provider Netflix, Inc. (NFLX - Analyst Report). With this, web-based services will be integrated into the cable system for the first time in the global pay-TV industry.

Additonally, the board of directors of Liberty Global decided to authorize a $4.5 billion share buy-back program over the next two years.

The company is predominantly operating in Europe, which is currently the most vulnerable region economically. Ongoing debt crisis in several European countries may significantly affect the future prospects of Liberty Global. The company is gradually shifting focus to western Europe and some Latin American countries.

However, recessionary pressure is most severe in these regions. A low per capita income may stall people from spending more on exorbitant high-speed bundled communication services and HD-DVR-based digital video services.

Liberty Global is currently trading at significantly higher multiples with respect to several valuation metrics compared with the industry average and the S&P 500. We believe that this high level of valuation may restrict above-market gain anytime soon.

Liberty Global currently has a Zacks Rank #3 (Hold).

Read the Full Research Report on LBTYA
Read the Full Research Report on NFLX
Read the Full Research Report on BT
Read the Full Research Report on TIVO


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