Brean Capital Downgrades Time Warner (TWX) to Hold

Brean Capital downgraded Time Warner (NYSE: TWX) from Buy to Hold.

Analyst Alan Gould commented, "We are reducing our rating on TWX to Hold from Buy as the arbitrage discount to the AT&T offer has shrunk to 12%, down from the high-teens, and TWX is now trading above our fundamental value of the low 90's. We note that AT&T shares are now above the upside of the collar so the deal is currently worth $109.29 in stock and cash, up from an initial value of $107.50. We also believe other names in the group have become relatively more attractive, particularly CBS (CBS, $64.50, Buy) where we are raising our TP to $75, and our recent upgrade, FOX (FOXA, $28.43 Buy).

Our fair value estimate is $104, a 5% discount to the deal value given the 1-year time horizon. We still believe the deal will be approved subject to some regulatory conditions. Furthermore, should the T deal fall apart, we believe other bidders could emerge which should help put a floor under the stock price. The Turner networks are well positioned for an evolution to skinny bundles with 85-90% of the revenue generated by 4 networks and enough sports to make them must-have cable networks. HBO, an a la carte network with an OTT offering, should be relatively immune to cord cutting. And Warner has historically been the greatest content factory, both television and film, in the industry."

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 $96.46 yesterday.

You May Also Be Interested In

• HSBC Downgrades Feng Tay Enterprises (9910:TT) to Hold
• Barclays Downgrades SSAB AB (SSABB:SS) (SSAAY) to Equalweight
• London Stock Exchange Group Plc. (LSEG:LN) (LNSTY) PT Raised to GBP88 at HSBC