Nomura Securities on American Cable & Satellite: Stick With PayTV - Selective Opportunities
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Price: $97.01 +0.38%
Rating Summary:
10 Buy, 11 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 25 | New: 24
Rating Summary:
10 Buy, 11 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 13 | Down: 25 | New: 24
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Nomura Securities on American Cable & Satellite: Stick With PayTV -
Selective Opportunities
Analsyt Mike McCormack, said, "After a strong run, we see ripe single stock opportunities: We believe that investors will have to be nimble in evaluating PayTV opportunities in 2012. With 4Q11 trends expected to echo 3Q’s slowing topline trends and present limited opportunity for margin expansion, we retain our Neutral stance on the group, however, we continue to view PayTV stocks as generally more attractively valued than the large cap telecom peers. We see selective opportunities for outsized returns."
"Top ideas for the quarter: 1) Time Warner Cable (NYSE: TWC)(Buy, PT$75): We see opportunity in Time Warner Cable’s discounted valuation relative to Comcast and are encouraged by signs of improvement in subscriber trends. We focus on voice subscriber trends as a harbinger of 2012 estimate stability and expect future capital return opportunities as 2012 progresses;
2) DIRECTV (NYSE: DTV) (Reduce, PT$32): We believe that investors are overly optimistic when discounting the risks associated with DIRECTV, specifically the risks to the core US business. In our view, this is the most significant opportunity this quarter. We have lowered our 2012 EPS to $4.00 from $4.02 previously."
Other Company Notes Include:
Comcast (Nasdaq: CMCSK)(Nasdaq: CMCSA) - Buy, $32 price target: "We believe consensus has already discounted superior cable operations into 4Q Comcast expectations. We expect the key debates in the quarter to focus on incremental capital returns and a path to turning around the NBC broadcast property. For the cable businesses, we focus on the growth in revenue per home passed and EBITDA per home passed as ARPU has become incomparable to peers."
Cablevision (NYSE: CVC) - Buy, $23 price target: "Investment in Cablevision shares has required patience to overlook a seemingly unending string of operational challenges, as well as the Bresnan merger integration process. Going forward, we are cautiously optimistic that the competitive pressures of Verizon could migrate to other (non-Cablevision) markets, expense growth could fade, and the Bresnan opportunities could ripen further, all leading to opportunities for positive estimate revisions, and improved sentiment. Longer term, we see continued opportunities for equity holders with a 4% dividend yield, and ~90% of the remaining 2012 free cash flow expected to be returned via share repurchases."
DISH Network (Nasdaq: DISH), Neutral, $27: "We believe the current debate on DISH shares is focused on the future optionality presented in various M&A and partnering permutations, and is less sensitive to fundamentals. From our perspective, DISH Network was one of the stars of the 2012 CES conference. The simplicity of the Hopper and Joey marketing message, the integration of the Sling and Blockbuster technologies, and the introduction of PrimeTime Anytime were significant advancements in the DISH Network marketing message."
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Selective Opportunities
Analsyt Mike McCormack, said, "After a strong run, we see ripe single stock opportunities: We believe that investors will have to be nimble in evaluating PayTV opportunities in 2012. With 4Q11 trends expected to echo 3Q’s slowing topline trends and present limited opportunity for margin expansion, we retain our Neutral stance on the group, however, we continue to view PayTV stocks as generally more attractively valued than the large cap telecom peers. We see selective opportunities for outsized returns."
"Top ideas for the quarter: 1) Time Warner Cable (NYSE: TWC)(Buy, PT$75): We see opportunity in Time Warner Cable’s discounted valuation relative to Comcast and are encouraged by signs of improvement in subscriber trends. We focus on voice subscriber trends as a harbinger of 2012 estimate stability and expect future capital return opportunities as 2012 progresses;
2) DIRECTV (NYSE: DTV) (Reduce, PT$32): We believe that investors are overly optimistic when discounting the risks associated with DIRECTV, specifically the risks to the core US business. In our view, this is the most significant opportunity this quarter. We have lowered our 2012 EPS to $4.00 from $4.02 previously."
Other Company Notes Include:
Comcast (Nasdaq: CMCSK)(Nasdaq: CMCSA) - Buy, $32 price target: "We believe consensus has already discounted superior cable operations into 4Q Comcast expectations. We expect the key debates in the quarter to focus on incremental capital returns and a path to turning around the NBC broadcast property. For the cable businesses, we focus on the growth in revenue per home passed and EBITDA per home passed as ARPU has become incomparable to peers."
Cablevision (NYSE: CVC) - Buy, $23 price target: "Investment in Cablevision shares has required patience to overlook a seemingly unending string of operational challenges, as well as the Bresnan merger integration process. Going forward, we are cautiously optimistic that the competitive pressures of Verizon could migrate to other (non-Cablevision) markets, expense growth could fade, and the Bresnan opportunities could ripen further, all leading to opportunities for positive estimate revisions, and improved sentiment. Longer term, we see continued opportunities for equity holders with a 4% dividend yield, and ~90% of the remaining 2012 free cash flow expected to be returned via share repurchases."
DISH Network (Nasdaq: DISH), Neutral, $27: "We believe the current debate on DISH shares is focused on the future optionality presented in various M&A and partnering permutations, and is less sensitive to fundamentals. From our perspective, DISH Network was one of the stars of the 2012 CES conference. The simplicity of the Hopper and Joey marketing message, the integration of the Sling and Blockbuster technologies, and the introduction of PrimeTime Anytime were significant advancements in the DISH Network marketing message."
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