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Barclays Says Charter Communication's SpinCo Investment Still Not Priced In

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Despite a big run-up in share price, Charter Communications (NASDAQ: CHTR) may not be fully valued, according to one analyst.

Barclay's Kannan Venkateshwar said Charter's 33 percent stake in the soon-to-be-created SpinCo hasn't yet been priced in by the market.

SpinCo, with an expected value of more than $14 billion, is the result of anti-trust concerns related to the pending $45 billion acquisition of Time Warner Cable by Comcast. The plan was announced in April.

In addition to the stake in SpinCo, Charter is expected to soon acquire 1.4 million new subscribers for $7.3 billion. Currently those subscribers are Time Warner Cable customers.

Charter, whose largest shareholder is Liberty Media (NASDAQ: LMCA), will have an option to acquire SpinCo in four years.

Although maintaining an Equal-Weight rating on Charter, "we're very positive on their earning potential in light of this transaction," Venkasteshwar said.

Venkasteshwar raised his Charter target to from $125 to $157 and boosted his target on Liberty from $1.65 to $1.72.

Liberty traded recently at $138.19, down 0.76 percent; Charter was changing hands at $160.53, down 1.16 percent.

Latest Ratings for CHTR

DateFirmActionFromTo
Nov 2014JefferiesMaintainsHold
Oct 2014MacquarieUpgradesNeutralOutperform
Sep 2014Canaccord GenuityInitiates Coverage onBuy

View More Analyst Ratings for CHTR
View the Latest Analyst Ratings

Posted-In: Barclay Kannan Venkateshwar SpinCoAnalyst Color Reiteration Analyst Ratings

 

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