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LONDON – UBS analyst John Janedis on Wednesday upgraded the stock of Time Warner from “neutral” to “buy,” citing “better stability/ visibility” of its earnings trends.
He also boosted his price target on the stock from $39 to $50.
“We believe the company’s earnings will be more stable and predictable going forward, benefitting from the upcoming affiliate fee cycle – starting in 2014,” Janedis said.
He also argued that TW, led by CEO Jeff Bewkes, is a defensive play “given less exposure to advertising versus peers,” and “significant” returns of capital via shareholder-friendly initiatives, such as dividend payments and stock buybacks.
Janedis also said that improved programming will help TW grow advertising “more in-line with peers for the first time in several quarters” starting in the fourth quarter.
TW management has recently touted its financial upside from upcoming carriage fee renewals. “After further analysis of TW’s upcoming affiliate fee renegotiations, we are raising our network revenue and [operating profit] estimates for 2014-2016.”
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