Liberty LiLAC stock maintains Buy rating at Benchmark amid Puerto Rico separation plans

Benchmark reiterated its Buy rating and $12 price target for Liberty LiLAC (LILA), expressing high confidence in the stock's outperformance ahead of the planned first-half 2026 separation of its operationally challenged but highly leveraged Liberty Puerto Rico (LPR) unit. The firm believes the market is overstating LPR's negative impact given its siloed debt structure and projects approximately $800 million in cumulative free cash flow for LILA between 2024-2026, which is deemed compelling against its current $1.55 billion market capitalization, underscoring the company's broader Latin American growth potential across its 20+ markets.

Analysis

Benchmark has reiterated its Buy rating and $12.00 price target for Liberty LiLAC (LILA), signaling high confidence in significant near-term outperformance driven by the planned separation of its Liberty Puerto Rico (LPR) division in the first half of 2026. The firm's core thesis is that the market is over-penalizing LILA for its LPR unit, which is described as "operationally challenged and highly leveraged." This mispricing is attributed to an underappreciation of LPR's siloed debt structure, which Benchmark believes obviates the need for a capital call from the parent company. In its valuation, Benchmark already assigns a substantial negative equity value of nearly $900 million to the Puerto Rico operations. Furthermore, the firm projects Liberty LiLAC will generate approximately $800 million in cumulative free cash flow between 2024 and 2026. This FCF forecast is considered compelling relative to the company's current market capitalization of approximately $1.55 billion, suggesting a significant valuation disconnect. Beyond the restructuring catalyst, the underlying business in over 20 Latin American markets shows fundamental strength, with Fixed Mobile Convergence penetration exceeding 30% in stable duopoly market structures.

Key Decisions for Investors

• Investors should consider the planned separation of the Liberty Puerto Rico unit as a primary value-unlocking catalyst, as the current stock price appears to excessively discount the value of the core Latin American assets.
• It is crucial to monitor management's execution on right-sizing LPR's cost structure and its ability to achieve the projected $800 million in cumulative free cash flow through 2026, as these are key pillars of the bull thesis.
• While the outlook is positive, the main catalyst is slated for H1 2026, so investors should be prepared for a longer holding period and watch for any changes in the timeline or execution of the separation strategy.