Needham & Company Maintains a 'Hold' on Time Warner (TWX); 2Q11 ROIC Trends
Tweet
Share
E-mailGet Alerts TWX Hot Sheet
Price: $2.23 --0%
Rating Summary:
14 Buy, 24 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
14 Buy, 24 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Join SI Premium – FREE
Needham & Company maintains a 'Hold' on Time Warner (NYSE: TWX).
Needham analyst says, "There is currently a 90% correlation between FY12E ROIC and media industry share prices. TWX’s capital efficiency highlights in the June 30, 2011 quarter include: 1) Cash From Operations is a general proxy for ROIC trends. Cash from Operations rose by $11mm in the June quarter to $43mm, after posting a $500mm decline y/y in the March quarter. For the first 6 months of FY11, cash from operations is down 38%; 2) Return of Capital. Falling assets employed is a lead indicator of improving ROICs. If shares plus debt are shrinking, capital markets are “capturing” the value of the shrinking asset base. This lowers the risk of value destruction tied to acquisitions; 3) Shares Outstanding fell by 26mm ($750mm) to 1.08B in 2Q11; 4) Net Debt rose by $1.55B (down 2% q/q & down 6% y/y) in 2Q11."
"FY12E. We calculate that TWX’s 2012 ROIC will rise by 20 basis points. TWX’s WACC should remain at 8.9%. TWX’s valuation is currently below the 90%-correlated regression line, so its share price should appreciate more than its improving ROIC alone would suggest in FY12."
For more ratings news on Time Warner click here and for the rating history of Time Warner click here.
Shares of Time Warner closed at $28.96 yesterday.
Needham analyst says, "There is currently a 90% correlation between FY12E ROIC and media industry share prices. TWX’s capital efficiency highlights in the June 30, 2011 quarter include: 1) Cash From Operations is a general proxy for ROIC trends. Cash from Operations rose by $11mm in the June quarter to $43mm, after posting a $500mm decline y/y in the March quarter. For the first 6 months of FY11, cash from operations is down 38%; 2) Return of Capital. Falling assets employed is a lead indicator of improving ROICs. If shares plus debt are shrinking, capital markets are “capturing” the value of the shrinking asset base. This lowers the risk of value destruction tied to acquisitions; 3) Shares Outstanding fell by 26mm ($750mm) to 1.08B in 2Q11; 4) Net Debt rose by $1.55B (down 2% q/q & down 6% y/y) in 2Q11."
"FY12E. We calculate that TWX’s 2012 ROIC will rise by 20 basis points. TWX’s WACC should remain at 8.9%. TWX’s valuation is currently below the 90%-correlated regression line, so its share price should appreciate more than its improving ROIC alone would suggest in FY12."
For more ratings news on Time Warner click here and for the rating history of Time Warner click here.
Shares of Time Warner closed at $28.96 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Coherent (COHR) PT Raised to $420 at Needham
- Nu Holdings (Nubank) (NU) PT Raised to $19 at Needham
- Wolverine World Wide (WWW) PT Raised to $24 at Needham
Create E-mail Alert Related Categories
Analyst CommentsRelated Entities
Needham & CompanySign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
