UPDATE: TF1

Buy - Upgraded to Buy at UBS

Buy – Upgraded to Buy at UBS

 

  • We believe the French Ad trends and TF1s mkt share will improve gradually this year. Content is king and this is where they dominate French TV which is all supportive. However the real big catalyst for us is the massive cash balance they have which will lead to a special dividend as the company has mentioned and a buyback. It is coming in Q4… UBS thoughts below:

 

TF1 Upgraded to Buy at UBS on Improving French Ad Trends

  • TF1 ad trends “less bad,” with recent UBS survey showing French TV ads stronger than anticipated at -2% in 3Q, raises to buy from neutral, lifts PT to EU13.30 from EU12.30.
  • UBS says survey results suggest S/T positivity; decline is less than before, will lead to positive investor sentiment
  • Shares have underperformed mkt by 28% YTD; upgrades to buy on this weakness

 

Wed, 02 Jul 2014 17:01

The TF1 War Chest Swells and Les Bleus March on

 

  • Audience numbers fell slightly in May. However the World Cup boost is coming and will put Q2 numbers on a sure footing.
  • The world cup so far has generated record audiences as the French march on.
  • During the last World Cup in 2010, TF1 started the year in similar fashion. Down 10.6% from year start to World cup start and went on to return 17% to year end. 2014 YTD down 13.5%.
  • Net cash can now be estimated at € 540 million and expected to grow to a billion in a year.(Sale of American discovery/51% sale of Eurosport so far. They have an option to sell the remaining 49% from mid-2015).
  • Acquisitions are in sight as the war chest will be used.
  • Expected acquisitions are in content (content is king as shown with ITV) and digital where they will look for targets to produce strong margins to replace the profitable Eurosport.
  • Returning cash to shareholders has also been promised. A share buyback or a special dividend is on the way.
  • French economy bottoming and macro structural change is coming.
  • We also expect a gradual recovery in the advertising market. 12 has been a good technical level to Buy with numerous catalysts on the horizon.
  • Looking for a PT:15 €.