Wells Fargo Raises Valuation Range, Not Rating on Time Warner (TWX) Following Latest AT&T Speculation

October 21, 2016 8:53 AM EDT
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Price: $95.69 --0%

Rating Summary:
    26 Buy, 19 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 14 | Down: 24 | New: 12
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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."

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 $82.99 yesterday.

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