Wells Fargo analyst Marci Ryvicker this morning cut her rating on DirecTV (DTV) to Market Perform from Outperform.
On the one hand, Ryvicker says several widely anticipated catalysts – the spin of the company’s Latin American unit, the sale of the company to a telco, a potential dividend – have failed to materialize. And she says none looks to occur any time soon.
And on the other hand, she contends that the company peaked fundamentally in 2009, and asserts that there is downside risk to estimates given intense competition from Dish Network (DISH); the secular decline of landlines, which hurts gross adds given the company’s ties to the telcos; a potential NFL lockout; and “likely sub losses” in 2011. She also thinks the company faces higher upgrade and retention costs that the Street had currently modeled.
Ryvicker notes that the stock is up 76% since March 30, 2009, but says she is no longer comfortable recommending the shares. The analyst moves her 2010 EPS estimate up slightly to $2.36, from $2.34, but cuts 2011 to $2.65, from $3.01.
DTV is down $1.26, or 3.2%, to $38.07.
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