A couple of analysts see a plus-side in the soon-to-be free floating appendages of AT&T(T Quote - Cramer on T - Stock Picks).
Lehman Brothers' reiterated its rating of strong buy on
Liberty Media Group, one of the four companies that will come from the AT&T's self-imposed dissection. Internet and media entertainment analyst Stuart Linde said he sees a strong upside to the stock, which is currently run as a tracking stock of AT&T.
After Liberty Mutual reported strong fourth quarter earnings on Friday, Linde said he sees "strong operational strength of its private assets; commitment to maintaining its investment grade rating and the reality of the pending spin-off from AT&T."
And he sees an upside despite the hit being absorbed by companies that rely on advertising. "With the fears over global advertising trends, Liberty offers media investors a relative safe haven. Advertising revenues account for only 15% of the company's private and public portfolio," Linde wrote. He also said he sees only a strong upside to the spinoff since it will remove regulatory shackles "allowing Liberty to pursue distribution opportunities" that it cannot under the AT&T umbrella.
Goldman Sachs analyst Richard Greenfield echoed Linde's sentiment in his own note today. "We continue to recommend Liberty and believe the upcoming spin-off of LMGA from AT&T (pending an IRS ruling) will be a catalyst for the stock." Greenfield says he believes Liberty Media is trading at a 20% discount to his firm's estimated net asset value of $17 to $18.
Noting what he calls a 20.4% discount, Linde wrote that he "strongly suggests investors aggressively purchase the shares before the spin-off."
Ahead of LMGA's earnings announcement after market hours Friday, the stock had slipped 4.8% in the previous week (compared to a 7.4% drop in T). Still, the stock is up 14.9% for the year, showing its relative strength in a declining market.
LMGA was trading 2.1% lower to $13.70. Its 52-week high is $29.93.
Dan Bernstein
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