UBS Drops DirecTV Like They Think Subscribers Will

UBS analyst John Hodulik has changed his rating on DirecTV (NASDAQ:DTV) from “buy” to “neutral,” citing a likely decline in subscribers as his chief concern.  Hodulik also cut his target price for the stock from $53 to $46 and slashed his estimated 2012 subscriber additions from 344,000 to 88,000.

Hodulik wrote, “The maturity of the U.S. pay TV market and increased competition from cable will require DirecTV to focus less on subscriber growth and more on retention and profitability.  While this strategy may make sense given the state of the industry, we believe it will result in slower growth, making [stock] multiple expansion hard to envision.”

The analyst did have one positive thing to say; “However, average revenue per user growth and churn are likely to improve as the company cuts promotions and discounts.”  The digital TV giant did announced today that it will be including BabyFirstTV, age appropriate educational content for children, to subscribers at no extra cost.  Sorry guys, I don’t think that move is going to save you.