Take Advantage Of Trading Choppiness In Charter; Wunderlich Maintains Buy, Raises Target

Wunderlich’s Matthew Harrigan believes Charter Communications, Inc. - Class A CHTR offers an attractive long-term investment opportunity, and recommends taking advantage of the “trading choppiness similar to that around the turnaround process at old Charter.”

Harrigan maintained a Buy rating on the company, while raising the price target from $254 to $280.

The Bear Perspective

“The market appears to be in somewhat of a holding pattern in its posture toward Buy-rated Charter Communications, especially prior to management providing more granularity on the merger integration process during its Q2 earnings call,” the analyst mentioned.

The bear view is that momentum is likely to be temporarily constrained by the imposition of the company’s pricing, packaging and technology templates on the former Time Warner Cable Inc TWC and Bright House clusters.

What Lies Ahead

“CEO Tom Rutledge and CFO Chris Winfrey have both been open kimono about reluctance to sub-optimize long-term results off an undue emphasis on immediate near quarter performance,” Harrigan noted.

The analyst believes management would be more willing to look more closely at deploying Spectrum Guide to the former customers of Time Warner Cable and Bright House in 2017.

“In the interim, the focus is on massive all-digital projects using Worldbox and the new UI (user interface), especially off the capital light Charter-owned ActiveVideo strategy that makes this possible for legacy set-top boxes,” Harrigan said.