Why Time Warner Inc Shares Could Pop to $80

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Time Warner Inc (NYSE: TWX  ) gained slightly this morning after Jefferies initiated coverage on the media giant with a buy rating.

So what: Along with the bullish call, analyst John Janedis planted a price target of $80 on the stock, representing about 16% worth of upside to Wednesday's close. So while momentum traders might be turned off by Time Warner's price strength over the past year, Janedis' call could reflect a sense on Wall Street that its long-term growth prospects still aren't fully baked into the valuation.

Now what: Jefferies expects Time Warner's earnings to grow at a compounded rate of 12% over the next two years. "With the publishing spin finally complete, we view Time Warner as a content machine without the issues associated with owning a TV network,"Janedis said. "Moreover, having effectively de-risked the affiliate fee story by providing guidance through '18, and with a secular tailwind of demand for Warner Bros. TV studio content, a compelling return of capital/leverage outlook, and improving ratings leading to peer-like ad growth, should allow the shares to outperform." When you couple that upbeat outlook with Time Warner's still-reasonable forward P/E of 15, it's easy to understand Jefferies' bullishness. 

Your cable company is scared, but you can get rich
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3009690, ~/Articles/ArticleHandler.aspx, 8/20/2014 9:28:11 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement