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Shares of Time Warner rose 4.4 percent Thursday as traders digested an investor day rife with news and rosy financial guidance, followed by numerous positive research notes from Wall Street analysts.
At Wednesday’s investor day in New York, CEO Jeff Bewkes said the company should earn $8 a share by 2018, up from $3.51 last year. Kevin Tsujihara, CEO of Warner Bros., the conglomerate’s film and TV studio, announced an impressive slate of films that included several anchored by DC’s stable of superheroes. Richard Plepler, CEO of Time Warner’s HBO, said the premium channel will launch an online service in the U.S. that will compete with Netflix.
All of this, and more, was very well received, as at least seven analysts issued bullish research notes on Thursday.
“The investor meeting reinforced our positive fundamental thesis on Time Warner,” wrote Drew Crum of Stifel. “We admit it — we were wrong. The Time Warner investor day was way more eventful than we thought it would be,” wrote Marci Ryvicker of Wells Fargo Securities. Ryvicker raised her valuation range of the stock to as much as $90 where as it had been $81 prior to Wednesday’s presentation.
The bullishness could not have come at a better time for Time Warner, as Bewkes and company have been under pressure to show how the conglomerate was better off with its independence than it would have been merged with 21st Century Fox, which offered to buy it three months ago for $85 a share.
On Thursday, shares of Time Warner rose $3.20 to $75.41, while the S&P 500 was flat on the day. Time Warner outperformed all other media/entertainment conglomerates on Thursday.
“Like Bruce Wayne emerging from training as the Caped Crusader, Time Warner management yesterday unveiled aggressive plans to flex its muscles in content production and distribution,” wrote Michael Morris of Guggenheim Partners. “We came away enthusiastic about the updated strategy and see the company’s plans as ambitious but also reasonable.”
Matthew Harrigan of Wunderlich Securities was in evaluation mode when he sent out his note about the event. “We are still in the process of running new valuation sensitivities for new growth buckets but think that preliminary fair value just for the baseline growth strategy could approach $100 per share,” he wrote.
Eric Handler of MKM Partners raised his 12-month target by $8 to $90 per share. “Time Warner’s roadmap for growth over the next four years proved better than expected,” he wrote.
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