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Why Liberty Global LiLAC Group Stock Slumped Today

By Timothy Green - Aug 8, 2016 at 3:26PM

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The Latin American arm of Liberty Global was downgraded by an analyst a few days after reporting earnings.

Image source: Liberty Global.

What: Shares of Liberty Global LiLAC Group ( LILA -1.65% ), the Latin American and Caribbean arm of Liberty Global, slumped on Monday following an analyst downgrade. At 2:45 p.m. EDT, the stock was down about 10%.

So what: Analysts at Wunderlich lowered their price target on Liberty Global LiLAC to $43 per share, down from a previous target of $59 per share. Wunderlich continues to rate the stock a buy, and the new price target still represents a 47% premium over the stock price following Monday's slump.

Liberty Global recently reported its second-quarter results, with the LiLAC Group posting generally positive results. The group added 46,000 service subscriptions and 18,000 organic customers during the quarter, with the recent acquisition of Cable & Wireless Communications boosting revenue. Total revenue jumped 94% year over year thanks to the acquisition, with rebased revenue rising 1%.

Now what: Analyst upgrades and downgrades should never be the sole reason behind buying or selling a stock. In the case of Liberty Global LiLAC Group, a bullish analyst became slightly less bullish, making the steep drop in the stock following the news seem like an overreaction.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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