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Time Spin-Off Adds Long Term Value for Time Warner (TWX)

March 7, 2013 7:37 AM EST Send to a Friend
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Price: $66.00 --0%

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    Up: 19 | Down: 9 | New: 7
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Janney Montgomery Scott bumped its price target on Time Warner (NYSE: TWX) higher, from $57 to $59, on news the company is in talks to spin-out its publishing business by year end.

"This move has been anticipated for some time (we originally analyzed the spin in 2008) and would likely value the publishing business at $4.6 billion total enterprise value ($5 per share)," analyst Tony Wible said. "It is difficult to say what the publishing business' equity value would be at this point as we do not know the cash/debt balance that will be moving over, but we do believe the Time Inc TEV can trade at a premium to its peers given its market leading position (or 8.0x EBITDA). The remaining core TWX should see a lift in its multiple given the lower risk to slower publishing growth and its modest immediate lift to growth that should allow it to sustain a trading multiple that approaches DIS or 8.5x."

The firm maintained a Neutral rating.

For an analyst ratings summary and ratings history on Time Warner click here. For more ratings news on Time Warner click here.

Shares of Time Warner closed at $55.46 yesterday.




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