On Thursday, Citi made a bullish move on Liberty Global (NASDAQ:LBTYA), upgrading the stock from Neutral to Buy and increasing the price target to $24 from $20. The firm anticipates mixed fourth-quarter results to be announced on February 15, with a follow-up conference call scheduled for 9 a.m. ET on February 16.
The upgrade comes with a focus on Liberty Global's potential to unlock value from its operating companies (OpCos). Citi's analysis suggests that, depending on the perspective and discount assigned to ventures, the value range could be between $2.1 billion and $3.1 billion, not accounting for Ziggo's shareholder loan.
Citi notes that while the full-year 2023 free cash flow (FCF) guidance may indicate a decrease from the previous year, Liberty Global is expected to discuss various strategies to enhance the worth of its owned assets during the upcoming conference call. The firm points out that Liberty Global's current market capitalization implies that only a limited equity value is assigned to the company's stubs, estimated at $1.1 billion to $3.1 billion.
The analyst from Citi believes that Liberty Global has adequate mechanisms to increase value over the next 12 to 18 months. This includes improving the balance sheet and liquidity situation for some of the OpCos. Although some corporate actions might take longer to implement, Citi has set a 90-day timeline for the company to begin executing these strategies.
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