DirecTV Is Flashing a Buy Signal - Barron's

Even as Sirius XM (SIRI) flirts with bankruptcy and rival DISH Network (DISH) sheds subscribers, Barron's says market-leading satellite-TV provider DirecTV Group (DTV) is "flashing a buy signal."

The company is "defying gravity," as one analyst puts it -- gaining more subscribers and growing earnings. The stock could pop more than 40%, to about $30.

Here's why Barron's is so bullish:

1. DTV's $300/season premier sports package, with its winning NFL Sunday Ticket, is a must-have subscription for serious sports fans. DTV leads the industry with 130+ high-definition channels.
2. DTV added 301,000 new subscribers during a Q4 in which other companies - and the economy - crumbled. Churn fell to a record low 1.42%.
3. DTV replaced DISH in a partnership with AT&T (T), which lessens the risk of it not having a broadband offering, and makes it more likely to keep the Ticket after its deal with the NFL expires in 2010.
4. Shares trade not far from 2005 levels, even though DTV increased its market share to 18% from 16%. CEO Chase Carey says shares are "woefully undervalued."

Loomis Sayles analyst Paul Wright thinks DTV will beat consensus EPS estimates in 2009, driving shares ($21) toward $30. "They are executing tremendously." Add to that the possibility of an overture by a telco such as AT&T or Liberty Media Interactive (LINTA) which already owns 53.6%.

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• Though the deadline for the switch to digital TV was delayed by the Obama administration, once it's law it will be a boon for DTV, Investment U says.
• Market Folly notes that $4B hedge fund Maverick Capital recently boosted its stake in DTV by 96.2%.

Comments

[ZenInvestor:]

Sirius is no longer 'flirting with bankruptcy'. Liberty solved that issue, and Malone is now set to repair Sirius XM the way he has Direct TV.

Mar 15 05:53 PM

[mac.barron:]

Barron's--so full of crap. Just like Fast Money and Motley Fool they are full of advice on what to buy at the exact time you should be doing just about anything but. I don't recall any of these asshats screaming "SELL!!!" before the crash, so why would you listen to them after?

Disclosure: Not listening to Barron's I was 100% out of the market on 1 September 2008 with the exception of one small mutual fund 401(k) that I forgot I owned.

Mar 15 07:36 PM

[lecherie:]

When everyone else is selling is when you should be buying. Especially when it is a company selling a product or service that is practically a necessity.

Mar 16 01:53 AM

[sirixm:]

"Sirius XM (SIRI) flirts with bankruptcy"?

Wikipedia: Grammatical tense is a temporal linguistic quality expressing the time at, during, or over which a state or action denoted by a verb occurs.

Dear Editor (Eli Hoffmann),

Either you don't know your grammar, or you are distorting the facts. Either one is not really acceptable for an editor, innit?

Mar 16 10:31 AM

[directcommu...:]

i think anything was a good buy at that time

Nov 08 03:55 PM