Goldman Sachs downgraded Univision Communications (UVN) to in-line from outperform.
Analyst Richard Rosenstein says Univision has consistently been the fastest-growing broadcaster by far, and recent trends suggest that a degree of its outperformance has widened. However, shares have risen 26% since the company reported second-quarter earnings, and 50% year to date.
Shares are currently trading at 24 times the 2003 EBITDA estimate, and 20 times the 2004 EBITDA estimate. In addition, shares trade at 49 times the 2003 free cash flow estimate and 37 times the 2004 free cash flow estimate, suggesting that a price that's 35 times to 40 times the free cash flow is justified. Although the multiple could expand further, shares could benefit from a healthy advertising recovery, but Rosenstein says it's difficult to see the stock outperforming to the same degree they have for the past year.