Bear Stearns thinks Time Warner Cable Inc. (NYSE:TWC) is a good business. Sort of.
The brokerage initiated the country's second largest cable firm as "peer perform". Bear Stearns thinks TWC will get an improved yield from the subscribers it bought from bankrupt Adelphia, but is concerned that "some Street estimates may be too ambitious for '07."
The real call from Bear Stearns is it prefers Comcast (NASDAQ:CMCSA) because it has better cash flow per subscriber and its programming costs are growing more slowly than they are at TWC. The firm's price target for the newly public stock is only $41 and it currently trades above $38. Not much of an endorsement.
Now that TWC trades on its own, most analysts who cover Comcast are likely to weigh-in with some judgment of what the company is worth. Comcast is up 40% in the last year, and Wall Street may think that cable is getting a bit rich. And, since many of the TWC shares were issued to Adelphia creditors, they may be anxious to turn them into cash.
Based on the early comments from institutional analysts, it would appear unlikely that TWC is going to pick up a lot of strong buy ratings with price targets well above what the shares trade now. The pricing of the shares appears to have been very efficient when they came public, and cable doesn't appear to be anyone's darling right now. Not at present valuations anyway.
Douglas A. McIntyre is a partner at 24/7 Wall St., LLC
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Reader Comments (Page 1 of 1)
3-02-2007 @ 8:45PM
dbw11111 said...
Something deos not ad up with TWC trading at 38 giving TWC a market just under 37 billion. If you divide 37 billion by 14.6 million subs then the street is valuating each TWC's sub at $2534 TWX paid around 3400 for Adelphia which was ill run. So either Parson's paid way to much or the street just contiues to hate TWX and Parsons. I would appreciate your opinion on the above.......Danny
3-03-2007 @ 6:14PM
Nagel said...
Do you think now is the time to invest in stocks like these or take a more defensive position?
http://finance.webaplex.com/
3-03-2007 @ 11:34AM
Ralph said...
Hi,
At the moment, just about every sector that we track is down since the free fall on Tuesday, on a breadth and price basis. A few very specific groups have shown some resilience on a breadth basis, such as oil & gas pipelines, building materials wholesale, personal computers, health care plans, etc..
On the downside we see some larger type groups taking the brunt of the selling on a breadth basis, such as Biotech, Homebuilders and Semiconductors. We do believe there is more downside to come, at least until things appear more clear from China. At that time we will be bargain hunting aggressively.
Cheers,
Ralph
http://blog.successfulonlinetrading.com/