The Zacks Analyst Blog Highlights: Liberty Global, Virgin Media, News Corp., TiVo and Kohl's
CHICAGO, Feb. 11, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Liberty Global Inc. (Nasdaq: LBTYA), Virgin Media Inc. (Nasdaq: VMED), News Corp. (Nasdaq: NWSA), TiVo Inc. (Nasdaq: TIVO) and Kohl's Corporation (NYSE: KSS).
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Here are highlights from Friday's Analyst Blog:
S&P Gives Positive View to Liberty Global
Rating agency Standard & Poor's (S&P) is keeping a positive outlook on media conglomerate Liberty Global Inc. (Nasdaq: LBTYA) following its agreement to acquire UK's leading cable multi service operator (MSO) Virgin Media Inc. (Nasdaq: VMED) for an enterprise value of $23.3 billion.
The rating agency affirmed Liberty Global's ratings at B+, keeping the company's debt four tiers below the investment grade. The company's rating could improve by one notch as the S&P believes that the acquisition will improve its asset portfolio and strengthen its cash flow generation.
Liberty Global will acquire 100% stake in Virgin Media in a cash and equity deal. Per the deal, the former will pay $47.02 in cash, 0.2582 Liberty Global Series A shares (totaling 86 million) and 0.1928 Liberty Global Series C shares (totaling 65 million) to each Virgin Media shareholder.
At the end of the recently concluded quarter, Liberty Global has nearly $4.2 billion in cash and marketable securities in its balance sheet. However, the company requires $5.9 billion in order to make cash payments to Virgin Media shareholders. So the required amount will be financed through a combination of debt financing and available liquidity of both Liberty Global and Virgin Media.
The deal, which is expected to materialize by the end of the first half of 2013, will produce cost synergies of $180 million for Liberty Global apart from helping the company to establish a strong foothold in the BSkyB dominated UK market.
BSkyB, which is partially owned by News Corp. (Nasdaq: NWSA), has 10.7 million subscribers, compared with Virgin Media's 4.9 million. Moreover, the roll out of Liberty Global's Horizon TV and Virgin Media's popular TiVo Inc.'s (Nasdaq: TIVO) next-generation TV platform will drive subscriber growth going forward. We believe that the successful integration of Virgin Media with Liberty Global will create a dominant force in the highly lucrative UK pay-TV market and improve the latter's growth prospects.
At the end of the previous quarter, Liberty Global had nearly $26.5 billion of outstanding debt on its balance sheet. Following the deal, Liberty will have to takeover Virgin Media's outstanding debt of $9 billion. This could act as a deterrent for the improvement in Liberty Global's debt rating as its high leverage position could significantly impact the company's future returns.
Currently, Liberty Global has a Zacks Rank #2 (Buy).
Kohl's January Comps Up
Specialty department store Kohl's Corporation (NYSE: KSS) posted increase in total sales and same-store sales results for the month of January compared with the prior-year period, where all lines of business except Footwear category achieved double-digit comparable store sales increases.
Excluding the sales for the fifth week of Jan 2013, Kohl's comparable store sales increased 13.3% for the four-weeks ended Jan 26, 2013 versus a same-store sales growth of just 0.6% in the four-week month ended Jan 28, 2012. Kohl's total sales, excluding the additional week of fiscal 2013, increased 14.1% in the month of Jan 2013 to $1.13 billion compared with 2.4% growth to $0.84 billion in the year-ago month. E-commerce sales also increased 59% over Jan 2012.
The January sales performance was impressive as the company was able to clear out its seasonal merchandise last month. The company witnessed strong performance in the Western region with a mid-teen increase in comparable store sales, whereas the South Central region reported a low double-digit increase in comparable store sales. All other regions reported mid-to-high single-digit increases.
Where the company managed to clear out its merchandises in January, it could not generate sufficient sales during the holiday season, as expected by the company. Kohl's performance during the holiday season was impacted by unfavorable weather conditions and lower consumer confidence, which forced Kohl's to give more-than-expected discounts to its customers.
This was reflected in December comparable store sales, which were lower than the company's expectations. Notably, the company's November sales were also below expectations.
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