Mediacom Stock Soars
Shares Up 20% On Heels Of Strong 1Q
By Mike Farrell -- Multichannel News, 5/7/2008 5:52:00 AM
Mediacom Communications stock soared Wednesday after the mid-market cable operator reported first quarter results that handily beat analyst expectations.
Mediacom shares rose 93 cents each, or 20%, to $5.49 per share in early Wednesday trading.
For the first quarter, Mediacom said revenue increased 10.3% to $340 million and cash flow rose 17% to $125.8 million. Mediacom, which had been plagued in the past by basic subscriber losses--as has the rest of the industry—appeared to reverse that trend in the first quarter, reporting a gain of about 2,000 basic video customers. It was the first time since early 2005 that Mediacom grew basic customers sequentially.
In addition, Mediacom added 27,000 digital video subscribers, 30,000 high-speed Internet customers and 19,000 phone subscribers in the period.
In a statement, Mediacom chairman and CEO Rocco Commisso said that while the company expected that its financial and operating performance would benefit from comparisons to its unusually weak performance in the first quarter last year, even he appeared surprised by the strong results.
“…We significantly surpassed expectations and produced record results, giving us a great deal of momentum for the balance of 2008," Commisso said in the statement. “Our quarterly RGU additions were the best ever, and we generated the highest year-over-year adjusted OIBDA growth in over five years.”
Mediacom also increased its full-year guidance as a result of the gains. Now the company believes revenue growth for the full year will be between 6.5% and 7.5% (instead of 6% to 7%). Adjusted OIBDA growth is expected to be between 7% and 8% for the year instead of between 6% and 7%.
The strong results prompted at least one analyst to slap a “buy’ rating on the stock.
Miller Tabak media analyst David Joyce raised his rating on Mediacom from “neutral” to “buy” Wednesday, adding in a report that the company “handily beat” his estimates for the quarter.
“Where are all these cable, telco and satellite TV subscribers coming from?” Joyce wrote. “Haven’t the naysayers and shorts been pressuring cable stocks for almost a year? Even our only neutral-rated stock (until now), [Mediacom], reported surprising strength in all metrics for 1Q08.”
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