Wunderlich Securities Sees Comcast Deal as a Positive for Time Warner Cable

In a report published Thursday, Wunderlich Securities analyst Matthew Harrigan reiterated a Hold rating and $138.00 price target on

. In the report, Wunderlich Securities noted, “CNBC reported last night that Comcast (CMCSA-$55.24, Buy) is making a $159 per share/$45.2bn all equity friendly bid for Hold-rated Time Warner Cable. The deal is, however, problematical, from the vantage point of the FCC and DOJ, with reservations having been expressed last year by FCC Commissioners - even with no black letter cable ownership cap. If Comcast just enabled TWC to hit its 2016 biz plan, we would arrive at TWC fair valuation ranging from $158 to $172, sans synergies and NBCUniversal benefits. The pre-synergy deal multiple appears to be near 8.1x 2014E OCF (WSI above OCF consensus), although a supposed $1.5bn in cost savings (let alone sales growth and customer retention) lowers the multiple to 6.9x and adds $29 per share in value. (Consensus multiples are 8.3x/7.1x).” Time Warner Cable closed on Wednesday at $135.31.