SunTrust Robinson Humphrey Maintain Neutral on AOL Following Disposal of Patch Assets, $47.25 PT

In a report published Thursday, SunTrust Robinson Humphrey analyst Robert Peck maintained a Neutral rating and $47.25 price target on AOL, Inc.

following a positive view of disposal of patch assets. According to the report, following AOL's announcement that it will shed its patch unit and stop investing in it, analysts view this as a smart move for two main reasons: “1) We believe the ROI of the spend on the unit was very low and we are happy to see the company redeploy those resources to potentially higher capital ROI efforts, like video; 2) We think this shows that Tim Armstrong is focused on shareholders. Many bears on AOL questioned whether Mr. Armstrong would have the fortitude to end the spending on a project close to his heart (he co-founded Patch). We applaud Tim and the board for making a difficult (but we feel correct) decision,” the report noted. The report further assert that investors should be pleased with this announcement and it is believed by the analysts that it may partially explain the recent run in stock, as some investors anticipated resolution of this division. AOL closed Wednesday at $47.25.