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Liberty Interactive Remains Neutral

Zacks Equity Research

We reaffirm our long-term Neutral recommendation on Liberty Interactive Corp. (LINTA). The company reported mixed financial results for the second quarter of 2013. Liberty Interactive currently has a Zacks Rank #3 (Hold).

Why Kept at Neutral?

We believe that the TV home shopping business will continue to flourish in the near future. The QVC segment of the company has successfully transformed itself into a powerful global brand, which may boost Liberty Interactive’s revenues in the double-digits. Management stated that its online sales will constitute more than 50% of the total revenue in the U.S. by 2014. Growing adoption of high-end smartphones in the U.S. is the main reason for revenue growth.

Moreover, Liberty Interactive currently holds about 22% of the equity and 57% of the total votes of all classes of common stock of TripAdvisor Inc. (TRIP). TripAdvisor is the world’s largest travel site, which allows users to post reviews of airlines, hotels, and vacation resorts throughout the world.

On Aug 2013, Liberty Interactive launched a new broadcast channel called “QVC PLUS”. This second channel currently airs all the live broadcasts (TV shows) of the existing QVC channel at a delay of three hours. Management has decided to introduce some special programming in the QVC PLUS channel in order to broaden QVC’s offerings.

QVC PLUS is currently available to DIRECTV (DTV) customers. Moreover, QVC has entered into carriage deals with Time Warner Cable Inc. (TWC) and Bright House Networks.  

Meanwhile, the stock price of Liberty Interactive has soared 35% in the last year and is trading at the high-end of its 52-week price range. We believe that the stock is currently fairly valued.

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