Cutting Estimates and Target Price on CCU, Maintaining Strong Buy

3/26 - "We had previously modeled 0.5% revenue improvement at CCU’s radio division, but the industry’s struggles have deepened as the economy continues to slow and radio advertising demand weakens even more. We have revised our radio revenue assumption to a 0.6% dip, which is slightly ahead of our radio industry forecast of a 1% drop. With a weaker economy, we also trimmed back our expectations for CCU’s outdoor division from 7.5% to 6.5% revenue growth. Accordingly, this causes an EBITDA decrease from $2.30B to $2.22B; our FCF estimate goes from $2.94 to $2.67."

"Trading in line with its peers would put it at about $29, by our calculations. In our sum-of-the-parts analysis...we arrive at roughly $37 per share. If we average the $29 per share from potentially trading in line with its peers, with an ~85% of the sum-of-parts calculation so to factor in a publicly-traded liquidity discount, and with the $39.20 proposed going-private offer, we generate a 6-12 month $33 target price. That would be 9.0x EBITDA and 12.4x P/’08E FCF."