Brean Capital Sees Signs of Improvement for Time Warner Cable

In a report published Friday, Brean Capital analyst Todd Mitchell reiterated a Buy rating and $165.00 price target on Time Warner Cable TWC. In the report, Brean Capital noted, “Poised to gain value from merger with Comcast. We see upside to CMCSA and TWC from the value to be created for both companies from their pending combination. Time Warner Cable's results in 1Q14 showed positive movement in many areas, but were far from outstanding, and likely positively influenced by the lateness of rate hikes in the quarter and cold weather inertia. We see the potential for upside to Comcast's forecast for synergies. "We expect cable will continue to be challenged by new OTT entrants and rising capital intensity, but we believe Comcast is uniquely well positioned to handle this situation, and we believe Time Warner Cable will reap significant benefits from having Comcast's template imposed on it, which should support increased capital returns once the deal closes. "We also believe Comcast sees large opportunities in wireless and advertising as a result of the scale the deal provides. We estimate the potential upside to TWC shareholders from the deal to translate to $165 per share and reiterate our Buy rating.” Time Warner Cable closed on Friday at $140.40.