Goldman Sachs Reiterates Buy on Virgin Media (VMED)

Goldman Sachs is out with its report today on Virgin Media VMED, reiterating Buy. In a note to clients, Goldman Sachs writes, "VMED's solid 1Q results strengthen our confidence in the sustainability of growth, which we believe is not reflected in the stock's 14% 2012E FCF yield. Customer quality and hence lifetime value continues to improve, Business growth is accelerating and Mobile growth should improve further thanks to ‘mobile credits'. We expect 1Q gross margin weakness to be temporary as VMED takes its price increase in 2Q and improving customer mix repays HD content investments. Debt re-financing should reduce annualised interest costs c.£14 mn, or 3% of 2011 FCF. We reiterate our Buy on VMED. We expect the stock to trade broadly in line with peers on the back of solid results." Shares of VMED closed Wednesday at $28.09, up 2.48% from Tuesday's close.