On Thursday, Deutsche Bank (ETR:DBKGn) adjusted its price target for NASDAQ:LBTYA, the stock of Liberty Global (NASDAQ:LBTYA), to $23.00, down from the previous $38.00. Despite this reduction, the firm continues to endorse a Buy rating for the company's shares. According to InvestingPro analysis, Liberty Global currently appears undervalued, with impressive gross profit margins of 67.5% and a notably low Price/Book ratio of 0.27.
The decision follows the spin-off of Sunrise, a move which has been beneficial to Liberty Global's shareholders, with the 'old' LBTYA stock experiencing a rise of over 20% since the record date on November 4, 2024. This momentum is part of a broader uptrend, with InvestingPro data showing impressive returns of 66% over the past year and 50.5% year-to-date.
The analyst from Deutsche Bank has provided clarity on the revised valuation, which now accounts for the separation of 'old' LBTYA and 'new' LBTYA post the distribution of Sunrise shares. This adjustment is based on the detailed analysis presented in the report titled "House of the rising SUNN" published on November 4, 2024. The new target price reflects the value of Liberty Global's shares excluding the Sunrise portion, which was previously incorporated into the overall target.
The spin-off has been a strategic move for Liberty Global, allowing shareholders to directly benefit from the performance of Sunrise. Since the record date of the spin-off, shareholders have seen a significant increase in the value of their 'old' LBTYA shares, validating the company's corporate strategy.
The new price target of $23 is set after taking into account the allocation of $15 per share to the Sunrise ADS that were received by shareholders. This allocation was part of the initial $38 target, which has now been adjusted to reflect the current structure of the company post-spin-off.
Deutsche Bank's report serves as a formal assessment of Liberty Global's value post the Sunrise spin-off. It underscores the analyst's view that, even without the Sunrise shares, Liberty Global's stock remains a favorable investment with a Buy rating. For deeper insights into Liberty Global's valuation and 11 additional exclusive ProTips, visit InvestingPro, where you'll find comprehensive analysis and detailed financial metrics in our Pro Research Report.
In other recent news, Liberty Global has been the focus of several significant developments. UBS has shifted its rating on Liberty Global from Buy to Neutral, citing changes in the company's business landscape, particularly the spin-off of Sunrise.
Liberty Global's portfolio now primarily consists of stakes in Virgin Media O2, Telenet, VodafoneZiggo, and a $3 billion Ventures investment portfolio. Despite facing competitive pressures, particularly in the UK market, the company sees growth opportunities through its broadband footprint and wholesale activities.
Liberty Global has completed the spin-off of its Swiss operation, Sunrise, into a separate publicly traded entity, a move expected to unlock significant value for shareholders. The company also announced during its Q3 2024 earnings call that it anticipates nearly $5 billion in total returns for the year, thanks to operational progress with Virgin Media O2 in the UK and fiber rollout partnerships in the Benelux region.
Furthermore, Liberty Global plans to rebrand its Ventures segment to Liberty Growth, focusing on investments in scalable tech and digital infrastructure. Despite recent challenges, the company remains optimistic, citing positive broadband net adds and mobile subscription growth at Sunrise.
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