We maintain our under-performer rating on Liberty
Interactive (LINTA). We now think the consumer-led economic
slowdown will continue to stifle the company’s earnings
growth well into 2009, with little visibility to improvement
other than easing comps.

When the economy turns,
we expect Liberty Interactive to accelerate EPS growth
to a mid-teens rate and maintain it for several years,
driven by QVC. Indeed, despite QVC s challenging
retail environment, Liberty Interactive posted 2%
revenue growth, albeit with declining margins. Also
driving the growth is Liberty’s e-commerce business,
which currently is doubling its revenue and OIBDA year
over year.

Neverthess, at 14.0x our 2010 EPS
estimates, we think the stock is richly valued,
presenting a poor risk/reward proposition in a climate of
murky earnings visibility with potential earnings
estimate cuts more likely than increases.Zacks Investment Research

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