Deutsche Bank Starts Time Warner Cable (TWC) at Buy

Deutsche Bank initiated coverage on Time Warner Cable (NYSE: TWC) with a Buy rating and a price target of $221. Analyst Bryan Kraft sees it as a way to play his top pick, Charter Communications (NASDAQ: CHTR).

"We're initiating with a Buy rating and $221 12-month PT, which is based on the Charter deal exchange ratio associated with the lower ($100) cash option multiplied by our $225 PT for pro forma Charter. The higher ($115) cash option scenario would yield a $218 valuation. This represents less upside than directly owning Charter stock, however, with a large cash component, it also represents less volatility (both upside and downside). Furthermore, in the event the deal is blocked by regulators, which we think is unlikely, Time Warner Cable will receive a $2B break-up fee from Charter, worth about +$4.50/TWC share after-tax and representing -$11/CHTR share after-tax," said Kraft.

For an analyst ratings summary and ratings history on Time Warner Cable click here. For more ratings news on Time Warner Cable click here.

Shares of Time Warner Cable closed at $183.50 yesterday.

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