UPDATE: Nomura Downgrades Cablevision Systems to Neutral Following Strong 2Q13 Results

In a report published Monday, Nomura analyst Adam Ilkowitz downgraded the rating on Cablevision Systems Corporation (NYSE: CVC) from Buy to Neutral, but raised the price target from $19.00 to $20.00.

In the report, Nomura noted, “Financial results in 2Q13 were strong for Cablevision, achieving 26% sequential AOCF growth and returning to positive fully taxed free cash flow. Revenue was a bit lower than expected, but Cable AOCF margin of 32.1% was better than our 31.5% forecast due to better control of non-programming costs. While revenue and AOCF met or beat expectations, subscriber trends disappointed for the second consecutive quarter. With Net Debt / EBITDA reaching 4.8x, including the Bresnan proceeds, we believe that Cablevision is near the level where it can resume share repurchases. We expect an improvement in AOCF and declining capital spending in the coming years but do not think free cash flow will exceed $500mn for some time, making Cablevision expensive on FCF yield despite the improvement in shareholder returns.”

Cablevision Systems Corporation closed on Friday at $18.43.