T&T (T)/ DIRECTV (DTV) Deal Makes Sense, Says Wunderlich Securities

Wunderlich Securities maintained a Buy rating on DIRECTV (NASDAQ: DTV) with a price target of $93.00. Analyst Matthew Harrigan thinks rumors about a deal with AT&T (NYSE: T) make sense.

"A deal with DirecTV would offer a premium demographic national video solution that supports first to market 4K TV capabilities while allowing AT&T's U-verse plant to be entirely dedicated to broadband. With current reliance on capacity limited copper drops into the home, this is not as good a local solution for broadband as Project VIP fiber/ GigaPower U-verse, but the latter requires so much time to market that it does not address current share momentum for broadband and even video from cable companies such as Comcast (Nasdaq: CMCSA). We do regard a condition from the government demanding divestiture of DirecTV homes in critical U-verse markets as a deal killer," he said.

"The provision of 1Gbps speeds off the VIP project to 21 potential new markets still does not offer a national video capability that DirecTV has. Furthermore, waiting for LTE Advanced release 10 for fixed broadband (possible speeds to 100Mbps) necessitates further delays and there are issues for the technology hardening out and for appropriate scaling to meet demand. Acquiring DirecTV allows video fix now while affording more time for wireline and wireless broadband solutions," he added.

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

Shares of DIRECTV closed at $77.60 yesterday.

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