Charter Communications Foresees Subscriber Growth, Hits New High - Analyst Blog

Shares of Charter Communications, Inc. CHTR, a leading American cable multi service operator MSO, zoomed to a new life time high of $150.67 on Friday before closing the session a little lower at $150.51. Over the past twelve months, the company's shares have gained more than 27%.

The company's shares have jumped nearly 20% in the past two months on the back of subscriber growth. As of Mar 31, 2014, Charter Communications had 4.195 million video, 4.519 million Internet and 2.325 million voice customers. During first-quarter 2014, the company gained 18,000 video customers, 136,000 Internet and 52,000 voice customers. Average revenue per customer relationship was $110.29 compared with $107.33 in the prior-year quarter.

In Apr 2014, Charter Communications and Comcast Corporation CMCSA reached a strategic cable TV agreement following the latter's deal with Time Warner Cable Inc. TWC. The merged entity of Comcast and Time Warner Cable will have around 33 million pay-TV subscribers. In order to avoid antitrust restriction, Comcast has decided to divest around 3.9 million Time Warner Cable video subscribers to Charter Communications to maintain its total share at 30% of the U.S. market.

Following the subscriber takeover, Charter Communication will become the second largest pay-TV operator in the U.S. with around 5.7 million subscribers. We believe this deal will benefit Charter Communications significantly as the company will achieve necessary scale to counter competition in the intensely competitive U.S. pay-TV market. Charter Communications' agreement with Comcast is a major reason why investors have been pumping money into the company over the past two months.

Charter Communication currently has a Zacks Rank #3 (Hold). A stock worth considering in this sector is EchoStar Corp. SATS, which sports a Zacks Rank #1 (Strong Buy).

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