Wall St Turns
Exacerbated Wed by steep slides in both the NYSE and NASDAQ markets, major cable stocks’ recent swoon has continued in the new year—save for Mediacom. As the equity prices of Comcast (-3%), Time Warner Cable (-0.50%), Cablevision (-1.8%), and Charter (-2.6%) all declined, Mediacom surged 15% to close at $5.27. Perhaps a factor was Pali analyst Richard Greenfield’s upgrade of the stock to “neutral” from “sell.” Increased DBS competition and expected lower ’08 revenues, EBITDA and FCF is “more appropriately discounted in the stock” at its current price levels, reasons Greenfield, who also believes that “the greatest damage (subscriber losses) has been done” related to the MSO’s carriage spat with Big Ten Net. Meanwhile, Sanford Bernstein analyst Craig Moffett offered positive comments concerning CVC, which has seen its stock price plummet approx 40% since July. “Even with a conservative set of competitive assumptions, one can construct a plausible case… for Cablevision being worth as much as $100 per share by 2011,” wrote Moffett in a research note, assuming the Dolans will shrink the number of outstanding shares. “We expect Cablevision (consolidated) to grow revenues at a 6% annual rate from 2007 to 2012, and to expand margins over the same period.” Competition from Verizon is no small problem, said Moffett, but solid cash flow will allow the MSO to become “the closest thing to an ATM that cable investors have ever seen.”