DirecTV Upgraded to 'Buy'

DirecTV (DTV) shares are higher Wednesday after Kaufman Bros. analyst Todd Mitchell raised his rating on the stock to Buy from Hold. He maintains a $28 price target on DTV.

Mitchell writes that the expects the company “to generate solid sub growth and financial gains with the strongest HD offering and the least exposure to an economic downturn.” He contends the company will hit an “inflection point” in mid 2008 when it will “generate a significant step-up” in free cash flow, as it completes a major fleet upgrade and scale backs retention marketing programs.

In Mitchell’s view, “the overriding competitive dynamic in the pay TV market is the HD upgrade cycle” - and he says DTV has a stronger HD offering than Dish Network (DISH) or the cable companies. While the loss of distribution through AT&T (T) in the old Bell South territory is a negative, he says the company should remain competitive in the Southeast with exclusive NASCAR and NCAA programming.

Also giving the stock a lift: the company’s announcement earlier this week of plans for a $1 billion increases in its stock repurchase plan.

DirecTV Wednesday is up $1.29 cents, or 6.4%, at $21.35.