Since March, Liberty Global (LBTYA) has shot from 18 to 27.36, propelled by booming business overseas. Cable giant Liberty, of which John Malone owns 27%, offers video, voice, and Internet services to 13 million customers in 17 countries, mainly in Europe--plus Australia, Chile, and Japan. Liberty is a good avenue to the growing demand for the "triple-play services," says John Maloney, president of M&R Capital Management, which has bought shares. At 7.9 times estimated 2007 earnings before interest, taxes, depreciation, and amortization, with a 17% yearly growth rate, Liberty is cheaper than Comcast (CMCSA), which trades at 10 times earnings and is growing at 15%, says Maloney. He thinks the stock will be at 58 in two years. Third-quarter results beat analysts' forecasts, with revenues jumping 47%, to $1.62 billion, and operating cash flow rising 50%, to $599 million. Given the robust results, Jeff Wlodarczak of Wachovia Capital Markets (WB) raised his 2007 revenue estimate to $7.5 billion and operating cash flow to $2.8 billion, up from the $6.4 billion and $2.3 billion expected in 2006. Liberty should be in the black by 2008, says Wlodarczak, with earnings of $35 million, or 8 cents a share, jumping to $158 million, or 36 cents, in 2009. On Nov. 28, Liberty said it was offering to buy back as much as $300 million of its A and C shares at 26 to 29.50, on top of the $1 billion worth repurchased in September.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. By Gene G. Marcial