Credit Suisse Comments On Virgin Media, Increases Forecasts

Credit Suisse reiterates its Outperform rating on Virgin Media VMED and price target of $29. It has slightly increased forecasts post-Q4. Credit Suisse remains ahead of medium-term consensus for revenue, EBITDA and FCF while it forecasts FCF growth above VMED's 20% target for FY2011 and forecast ~20% FCF growth for both FY2012 and FY2013. Credit Suisse believes VMED can further leverage its network advantage to continue to up sell customers to higher broadband speeds. It expects this broadband migration to boost VMED's customer mix and boost overall ARPU for the next 2-3 years. Since the start of 2010, 37 price changes have been announced: 27 up, 10 down. BT and VMED are putting up prices again in April 2011. Sky is competing rationally and TalkTalk is focused on internal integration—the current TalkTalk promo lasts only until end Mar-11. Credit Suisse's VMED broadband forecasts remain unchanged despite BT and SKY reporting strong numbers in Q4. It cut its medium-term TV subscriber by 1% and increased Telephony subscriber estimates slightly to reflect Q4 trends. VMED closed Wednesday at $26.68