Citigroup Smith Barney analyst Niraj Gupta began coverage of Hughes Electronics Corp. with a "buy" rating and a $21 12-month price target, citing significant growth potential fueled by the DirecTV Inc. direct-broadcast satellite business.
Gupta wrote that Hughes should generate higher cash-flow and free-cash-flow (cash flow after interest payments and capital expenditures are made) growth than any other large market-capitalization firm in the media and communications sector over the next several years.
Gupta said he expected cash-flow margins (cash flow as a percentage of revenue) at DirecTV to rise from 11.7% in 2003 to 20% in 2008.
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