Topeka Reaffirms Buy On Liberty Interactive Following Sale Of Floral And Gifting Business To FTD
In a research report published today, Topeka Capital analyst Victor Anthony reaffirmed a Buy rating on Liberty Interactive Inc. (LINTA) with a $34 price target on the heels of the news of the sale of Provide Commerce’s floral and gifting businesses to FTD for $430mm.
Anthony noted, “Liberty noted that they are committed to the QVC Group tracking stock, which would include QVC and their 38% interest in HSN (HSNI-$56.59:Buy), but the timing has been delayed. This sale and the commitment to the QVC Group tracking stock means that Liberty has walked away from a Liberty Digital Commerce tracking stock, which quite frankly, several investors thought they would do, given the recent underperformance of the businesses. LINTA reports 2Q14 next Tuesday and we expect a recovery at the domestic QVC business from less than 1% growth in 1Q14”.
The analyst continued, “We project revenues of $2.46B, +2.8% YoY, vs. consensus of $2.50B, and Adj. OIBDA of $470.8mm, 19.1% margin, vs. consensus of $472.4mm. Our estimates consist of QVC Domestic growth of 2.0% YoY, vs. 0.6% YoY in 1Q4, which was impacted by several items including weather, viewership competition from the Olympics, late timing of Easter, and late shipments of gardening and jewelry events. Given the strong 2Q GDP number and stronger than expected SSS results throughout the quarter from traditional retailers, it is likely that QVC Domestic revenue growth will exceed our estimate. We model QVC Domestic Adj. OIBDA of $332mm (24.8% margin). For QVC International in aggregate, we model revenues of $677mm, +2.1% YoY, and Adj. OIBDA of $117mm (17.2% margin). Japan and the U.K. are likely to be the growth engines in the quarter. For the eCommerce segment we model revenue growth of 3% to $452mm, and Adj. OIBDA of $27mm”.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform analyst Victor Anthony has a 21.1% average return and a 73.3% success rate. Anthony has a 16.0% average return when recommending LINTA, and is ranked #38 out of 3195 analysts.