DIRECTV's Stock Falls On Negative Forecast

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DIRECTV's Stock Falls On Negative Forecast
By Swanni

Washington, D.C. (December 16, 2011) -- DIRECTV's stock fell 4.1 percent on Thursday following a negative forecast from Nomura Equity Research analyst Mike McCormack, reports the Associated Press.

The wire service says the analyst cut his rating on DIRECTV's stock from "neutral" to "reduce over concerns regarding the satcaster's growth plans in Latin America and its finance share buybacks. McCormick cut his target price on DIRECTV from $47.50 to $32; the stock finished at $43.49 yesterday.

McCormick said DIRECTV, which has seen booming business in Latin America in recent years, perhaps has invested too heavily to accomplish that expansion. He adds that in the U.S., DIRECTV has also been investing too much on retaining customers and this is hurting its profit margin.

Unlike many of its rivals, DIRECTV has been able to add net subscribers in recent financial quarters, thanks in part to a free NFL Sunday Ticket promotion in the third and fourth quarters. DIRECTV now has 19.8 million subscribers, nearly one million more than a year ago.

McCormick said DIRECTV's profit margin has fallen from 49 percent in 2010 to 5 percent in the third quarter of 2011 when the satcaster launched its free NFL Sunday Ticket offer. Possibly further complicating DIRECTV's profit margin in the future is the high cost of acquiring programming.

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Phillip Swann is president and publisher of TVPredictions.com. He has been quoted in dozens of publications and broadcast outlets, including CNN, Fox News, Inside Edition, The New York Times, The Washington Post, The Chicago Tribune, The Financial Times, The Associated Press and The Hollywood Reporter. He can be reached at swann@tvpredictions.com or at 703-505-3064.

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