Liberty Global Posts Better-Than-Feared 2020 Results; Street Sees 14% Upside

Converged video, broadband and communications company Liberty Global reported fourth quarter and fiscal 2020 numbers on Feb. 15that beat analysts’ expectations.

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Liberty Global (LBTYA) posted a net earnings loss of $1.03 billion during the fourth quarter, as compared with a net earnings loss of $1.39 billion in the year-ago period. Revenue increased 14.9% year-on-year to $3.43 billion, topping analysts’ estimates of $3.31 billion. This growth was driven by the Sunrise acquisition and favorable foreign currency movements.

In 2020, the company added 242,000 broadband subscribers and 513,000 postpaid mobile subscribers.

For fiscal 2020, the company generated sales of $11.98 billion compared to $11.54 billion in 2019. Fiscal 2020 net operating losses stood at $1.47 billion, a decrease of 4.1% from the comparable year-ago period.

Liberty Global’s CEO Mike Fries said, “2020 was a transformational year in which we announced highly accretive transactions in Switzerland and the U.K., creating fixed-mobile champions in two of our core markets and unlocking nearly $11 billion of synergies on an NPV basis.”

Fries expects the joint venture between Virgin Media and Telefonica’s O2 to close in mid-2021. Liberty Global has operations in seven European countries under the brands Virgin Media, Telenet, UPC, Sunrise UPC and VodafoneZiggo, which it owns in a 50/50 joint venture.

Notably, Liberty Global repurchased 9% of its common shares at an average price of $19 per share.

Looking ahead, for fiscal 2021, Liberty Global estimates a modest revenue increase on the back of customer growth, higher prices and B2B service increases. It sees 25% growth in consolidated adjusted free cash flow to $1.35 billion for fiscal 2021.(See Liberty Global stock analysis on TipRanks)

Last month, Jefferies Analyst Ulrich Rathe raised Liberty Global’s price target to $28 from $25.70 (11.7% upside potential) but reiterated a Holdrecommendation. Rathe sees “Soft, if improving financial momentum” for the stock in 2021, and told investors that the company should benefit from “significant” synergy value from both the pending U.K deal and the already closed Swiss deal.

The rest of the Street also has a Hold consensus rating on the stock based on 1 Buy and 4 Holds. The average analyst price target of $28.52 implies 14% upside potential from current levels. That’s after the stock has already run up 23% over the past year.