Zacks Investment Research downgraded shares of Liberty Global Inc. (LBTYA) from NEUTRAL to UNDERPERFORM on June 15, 2012, with a target price of $42.00.
We downgrade our recommendation on Liberty Global to Underperform based on two factors (1) an extremely high-level of current valuation of the company, and (2) precipitous macro-economic fluctuations in the European region, which is the core business area of the company. Liberty Global reported mixed financial results for the first quarter of 2012. Though revenue beats the Zacks Consensus Estimate, net income fell below it. Meanwhile, in the previous quarter, the company added a net 445,000 organic revenue generating units, up 71% year over year, witnessing best ever performance in its history. We believe the long-term business fundamental of the company is still intriguing, primarily due to strong demand for its digital TV services, faster broadband network, and triple-play bundled services. Nevertheless, business integration risk persists as Liberty Global has recently acquired several related businesses.
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