Morgan Stanley Updating Model for 4Q10 Results On Liberty Global

In a report published by Morgan Stanley, it is updating the model for 4Q10 results on Liberty Global LBTYA.

Morgan Stanley said that it remains Equal-weight LBTYA shares. “While revenue and EBITDA trends have improved in Liberty's major Western European markets YTD, consolidated growth is roughly in-line with the group and valuation appears to reflect this improvement. LBTYA trades at a 6.5% 2011 FCF yield, broadly in-line with European cable peers (VMED, KDG, and TNET) but at a premium to US cable peers. While upside drivers include increasing price and subscriber momentum in Western Europe, valuation, the continued impact from Eastern European competitive pressures and unknowns around several potential M&A opportunities keep us on the sidelines. Finally, we see both potential upside and downside for LBTYA and its relatively high financial leverage suggests volatility around the equity, as one turn of EBITDA represents about a 50% change in share price.”

Liberty Global closed yesterday at $40.62.