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Analyst Blog

On Aug 12, 2014, Zacks Investment Research downgraded Liberty Global plc (LBTYA - Analyst Report) by a notch to a Zacks Rank #4 (Sell) based on the company’s dismal performance in the second quarter of 2014.

Why the Downgrade?

On Aug 5, this major triple-play cable operator reported dismal quarterly numbers for the second quarter of 2014, wherein both the top and bottom line missed the Zacks Consensus Estimate. Quarterly revenue surged 50.5% year over year but missed the Zacks Consensus Estimate by 0.3%. The company reported earnings per share of 1 penny lagging the Zacks Consensus Estimate of 13 cents.  

Following the disappointing quarterly numbers, the Zacks Consensus Estimate for earnings moved lower over the past 30 days, for 2014. For the current year, the consensus has declined a whopping 1250% to 2 cents, over the past 30 days. Notably, the company has missed the Zacks Consensus Estimate in three of the last four quarters, with an average miss of 83.03%.

To make things worse, Liberty Global continues to lose customers for its basic video offerings. In the second quarter of 2014, the company lost 72,000 video customers. Several European broadband service providers are gradually deploying high-speed DSL and Fiber-to-the-Home networks, which is making the industry extremely competitive.

Other Stocks to Consider

Better-ranked stocks worth considering in the sector include Cablevision Systems Corporation (CVC - Analyst Report), Media General, Inc. (MEG - Snapshot Report) and CTC Media, Inc. (CTCM - Snapshot Report). Cablevision Systems sports a Zacks Rank #1 (Strong Buy), whereas Media General and CTC Media bear a Zacks Rank #2 (Buy).

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