Citi Has Buy Rating On Virgin Media (VMED)

Citi Investment Research has a Buy rating and a $42 price target on shares of Virgin Media VMED. In a note to investors, Citi writes, "Sales of £982.3m +0.3% vs. £980m cons. (CIRA £989m). Mobile revenues were a touch weak driven by lighter ARPU but the strong B2B activity during the quarter, helped by wholesale, made up the difference. EBITDA of £376.1m was in line with consensus and 3% below the £388m for CIRA due to phasing. Cash capex of £177m was 7.6% vs. cons. Despite this increase in investment FCF was 4.2% ahead of consensus. Net debt of £5,534m was -0.9% below CIRA and +1.5% ahead of consensus. We do not expect material changes to consensus resulting from these." Citi goes on to say, "VMed has underperformed cable peers ytd, but these numbers should help provide the confidence needed to support a re-rating over the medium term in our view. The stock trades at a discount on 6x 2012E EV/EBITDA vs. KDG on 7.5x and Telenet on 8.5x." Shares of VMED gained 68 cents yesterday to close at $28.09, a gain of 2.5%.