Zacks Investment Research downgraded shares of Liberty Media Corporation. (LMCA) from NEUTRAL to UNDERPERFORM on June 27, 2013, with a target price of $113.00.
We downgrade our recommendation on Liberty Media to Underperform primarily based on its current valuation. The stock price has soared more than 23% in the last year. At present, Liberty Media is trading at extremely high multiples compared to both the S&P 500 and the industry average with respect to several valuation metrics. We believe that the stock is overvalued at this stage and the multiples must converge toward its peer average. Nevertheless, the company reported excellent financial results for the first quarter of 2013, easily beating the Zacks Consensus Estimate. Liberty Media is gradually restructuring its business model, targeting to control the subscription-based companies. Furthermore, management is pursuing a systematic share buy-back program to lift its shareholders' wealth. The spin-off of the Starz segment as a separate entity has helped the company to improve its financial position.
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