On Wednesday, Rosenblatt Securities adjusted its price target for Liberty Broadband (NASDAQ:LBRDA) Corporation (NASDAQ:LBRDK) shares, reducing it to $80 from the previous $93. Despite the decrease, the firm maintains its Buy rating on the stock. The revision reflects a corresponding decrease in the price target for Charter Communications (NASDAQ:CHTR), in which Liberty Broadband holds a significant stake.
The price target adjustment is primarily due to a lowered earnings cycle projection for Charter Communications, now set at $292, a $43 reduction. Rosenblatt has also incorporated the latest financial reports from the first quarter of 2024 into its estimates. The firm's valuation of Liberty Broadband continues to factor in the assumption that Charter Communications and Liberty Broadband will eventually merge.
Liberty Broadband's CEO, Greg Maffei, has reiterated at recent investor conferences that a combination with Charter Communications would be a logical outcome. However, Rosenblatt highlights that there is currently no clear timeline for such a merger, with possibilities ranging from the near future to several years down the line.
The uncertainty surrounding the potential merger has led to an increase in the market spread of Liberty Broadband's shares. According to Rosenblatt's calculations, if Liberty Broadband's stake in Charter Communications were valued at market rates today, the shares would be 42% higher, in contrast to the historical average of 26%.
Despite the widened spread, Rosenblatt's Buy rating is based on the belief that Liberty Broadband presents a more attractive investment opportunity for gaining exposure to Charter Communications.
InvestingPro Insights
Liberty Broadband Corporation (NASDAQ:LBRDK) has recently shown some interesting financial metrics that could be relevant for investors considering the stock following Rosenblatt Securities' price target adjustment. According to InvestingPro data, Liberty Broadband has a market capitalization of $7.53 billion and is trading at a P/E ratio of 8.96, which adjusts to 8.29 based on the last twelve months as of Q1 2024. The company's revenue for the same period stands at $980 million, with a gross profit margin of 75.0%, indicating strong profitability in terms of revenue conversion.
InvestingPro Tips suggest that while Liberty Broadband has liquid assets that exceed its short-term obligations, it is trading at high valuation multiples in terms of EBIT, EBITDA, and revenue. This could indicate that the market is pricing in future growth expectations or potential synergies from a merger with Charter Communications. Moreover, despite the stock taking a significant hit over the last six months, with a price total return of -36.95%, analysts are optimistic, predicting the company will remain profitable this year.
For investors looking for a deeper dive into Liberty Broadband's financial health and future prospects, there are additional InvestingPro Tips available at InvestingPro. To enhance your investment research, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With a total of 7 additional tips listed on InvestingPro, investors can gain a more nuanced understanding of the company's performance and valuation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.