Analysts: More Deals Ahead For Charter Communications

Charter Communications, Inc. CHTR could look for further acquisitions, assuming its proposed $10.4 billion buy of Bright House Networks LLC goes through, analysts said Wednesday.

The deal "effectively positions Charter to roll up the usual candidates, perhaps even Cox Communications," Wunderlich's Matthew Harrigan said.

With Charter's leverage targets unchanged by the proposed Bright House deal, this "suggests more M&A or buybacks to come," according to Morgan Stanley's Benjamin Swinburne.

The Bright House deal is contingent on regulatory approval of Comcast Corporation's CMCSA proposed $45 billion acquisition of Time Warner Cable Inc TWC.

Canaccord's Gregory Miller said that contingency is a vote of confidence that anti-trust regulators will approve the Comcast deal.

Miller raised his target on Charter 7 percent and reiterated a Buy rating.

But Harrigan downgraded Charter to a Hold, citing uncertainty surrounding the antitrust review of the Comcast-Time Warner merger.

"We probably would have retained a Buy rating if there were a clear path" for the Bright House deal independent of Comcast's prospects, said Harrigan, who raised his Charter target 2 percent to $221.

Swinburne, who didn't offer a rating on Charter, called the company "the natural acquirer for operators serving much of the mid-and smaller-sized footprints in the U.S."

Cable operators see an increasing need for "scale" and a centralized operating approach in order to acquire programming and develop products, Swinburne said.

"Smaller operators are looking to get larger or exit," Swinburne said.

Charter, up about 4 percent since announcing its proposed acquisition, changed hands recently at $190.63, off $2.48.