Markets & Finance

Legg Mason Initiates DirecTV At Buy


Legg Mason initiates coverage of DirecTV Group (DTV) with a buy and adds it to its select list.

Analyst Daniel Zito says DirecTV has been pressured by lighter-than-expected fourth-quarter subscriber growth, tepid 2005 guidance, and continued overhang of GM Pension Funds ownership of 16% of shares outstanding. DirecTV shares are down 13% on a year-to-date basis.

He notes, with $2.8 billion in year-end 2004 cash, conservative debt levels, and positive cash flow anticipated in 2005, DirecTV has the financial flexibility to aggressively invest in business, while returning additional cash to shareholders.

Zito thinks DirecTV will likely utilize its strong cash position to repurchase GM-held shares at the end of 2005. He sets an $18 target.


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