Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

We downgrade our recommendation on Liberty Interactive Corp. (LINTA - Analyst Report) to Underperform based on the company’s weak financial results for the fourth quarter of 2012. While the top line barely met the Zacks Consensus Estimate, net income fell below the same.

Why the Downgrade?

A major concern for Liberty Interactive is that the growth rate of the company’s QVC segment has slowed down significantly.This segment currently generates approximately 85% of the company’s total revenue and 100% of operating profit. Therefore any fluctuations in the revenue stream of QVC will significantly affect the company’s overall financials.

Furthermore, the stock price has also soared nearly 35% in the last year and is trading at the high end of its 52-week price range. With respect to several valuation metrics, the stock is trading at significantly higher multiples compared with the S&P 500. Liberty Interactive currently has a Zacks Rank #3 (Hold).

Other Causes of Concern

According to a report of Internet Retailer, after Amazon.com Inc. (AMZN - Analyst Report), QVC was the second-largest e-commerce retailer of the U.S. in 2012. Despite this,the e-commerce businesses of Liberty Interactive are still reeling under losses. In the reported quarter, adjusted operating income before depreciation and amortization of this segment fell by an enormous 29%, year over year. Low advertising revenue and increased promotional activities are the primary reasons for this sorry state of affairs.

With 69% market share, QVC has become the market leader in the $8 billion TV home-shopping business. This places QVC far ahead of its rivals, HSN Inc. (HSNI - Snapshot Report) and ValueVision Media Inc. (VVTV - Snapshot Report). However,increasing deployment of personal video recorders, video-on-demand technology and IPTV network are gradually changing the distribution and viewing habits of the common people. These fundamental changes are taking a toll on the home shopping networks.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%