DirecTV Touches Record After Hudson Square Recommends Buying

DirecTV, the largest U.S. satellite-television provider, reached an intraday record in New York trading after Hudson Square Research advised buying the shares to take advantage of growth in Latin America.

The shares climbed 0.6 percent to $53.01 at the close in New York, pushing its gains for the year to 24 percent. DirecTV rose as much as 4.7 percent to $55.17 earlier in the session, reaching the highest intraday level since 1985, when its predecessor company was controlled by General Motors Corp. The stock failed to reach its Sept. 13 record close of $54.19.

While U.S. subscribers fell last quarter for the first time in company history, Latin American quarterly gains have set six straight records, capped by last quarter’s 645,000 new customers. Hudson Square raised its estimate for third-quarter Latin American subscriber additions to 650,000 from 500,000 and increased its 2013 estimate to 2.5 million.

“I don’t see any reason why the numbers they’ve put up the last few quarters are going to change,” Todd Rethemeier, an analyst at Hudson Square in New York, said in an interview. Only about 30 percent of Latin American households have cable or satellite subscriptions, leaving room for growth, Rethemeier wrote in a note to clients. He previously had a neutral rating on the shares.

DirecTV hasn’t seen a slowdown in subscriber additions in Brazil, its biggest Latin American market, Chief Executive Officer Mike White said Sept. 21 at an investor conference. He said he doesn’t expect Brazil state government officials to approve a tax increase on video service when they meet Sept. 28. The measure would force DirecTV to either increase prices or absorb the cost of the tax, hurting profit margins.

DirecTV (DTV) will “do fine” in the third quarter in terms of U.S. subscriber additions, White said.

To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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