Wells Fargo Raises Valuation Range, Not Rating on Time Warner (TWX) Following Latest AT&T Speculation
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Wells Fargo analyst Marci Ryvicker raised her valuation range on Time Warner (NYSE: TWX) to $82-87 from $75-80 on recent speculation AT&T (NYSE: T) is interested in acquiring the company. The analyst is not convinced about a deal and maintained a Market Perform ratng.
Ryvicker commented, "Look, we've always said that if there's a library to buy, it's Warner Brothers. So it's no surprise that TWX keeps popping up as a "takeover" focus with CNN suggesting this past May that AAPL has taken a look and now Bloomberg outright stating that "Sr. executives at T and TWX have met in recent weeks to discuss various business strategies incl. a possible merger." (None of the cos. mentioned have commented). To be honest, we're in a tough spot. Candidly, we have already missed this one, with TWX +23% YTD as of YESTERDAY's (10/19) close vs. the S&P +5%. But with this kind of run and a multiple ABOVE DIS (10x NTM EBITDA vs. 9.4x, respectively), it would be really tough for us to upgrade now - esp. since this is just speculation and as you just read, does not necessarily equate to a deal. That said, we do think there is now a floor under this stock; thus we raise our valuation to $82-87 from $75-80. An actual transaction could provide additional potential upside, but we don't think one is imminent. Hence, we remain Market Perform."
Shares of Time Warner closed at $82.99 yesterday.
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