Market Overview

AT&T's Acquisition Of Time Warner 'Compelling,' But Will Take Time To Show Results

Share:
AT&T's Acquisition Of Time Warner 'Compelling,' But Will Take Time To Show Results
Related T
CNN Sues Trump After Suspension Of Acosta's Press Pass
Streaming Services, Fox Assets And More On The Table For Today's Disney Earnings
Apple partners with "Moonlight" studio (Seeking Alpha)

AT&T Inc. (NYSE: T)'s acquisition of Time Warner Inc (NYSE: TWX) is "compelling," but unlikely to show any positive financial impact on financial metrics until 2020 at the earliest, according to JPMorgan.

The Analyst

JPMorgan's Philip Cusick resumed coverage of AT&T with a Neutral rating and $36 price target.

The Thesis

AT&T's acquisition of Time Warner will likely close as the judge's ruling made it "very clear" regulatory authorities don't have a strong enough case to block the deal, Cusick said in a note. As such, the company will likely proceed with its plan of leveraging Time Warner's content into wireless and video and create targeted advertising.

Since AT&T needs to "build the engines" of its new video strategy, investors should expect weakness in the entertainment business to persist through 2018 but should show signs of improvement in 2019, the analyst said. Nevertheless, negative revenue growth of 7 percent in 2018 is expected and negative 4 percent in 2019.

AT&T's core mobility business could continue seeing pressure if competition ramps up and the company is forced to bundle wireless with video and broadband which would impact wireless results, the analyst wrote.

Bottom line, AT&T's stock could rebound in the near-term after a "period of deal-related flow back," but there are better picks in the large-cap telecom space for investors.

Price Action

Shares of AT&T were trading higher by 0.7 percent Tuesday morning at $32.41.

Related Links:

Cramer: AT&T-Time Warner Decision A 'Huge Positive' For Overall Market

Net Neutrality Repeal Is Official: Will You Notice?

Image credit: Luismt94 (Own work) [CC BY-SA 4.0 ], via Wikimedia Commons

Latest Ratings for T

DateFirmActionFromTo
Oct 2018BairdMaintainsOutperformOutperform
Oct 2018Tigress FinancialUpgradesNeutralBuy
Sep 2018UBSUpgradesNeutralBuy

View More Analyst Ratings for T
View the Latest Analyst Ratings

Posted-In: JPMorgan Philip Cusik Time Warner tv wirelessAnalyst Color Analyst Ratings Media Best of Benzinga

 

Related Articles (T + TWX)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
ACBIKeefe Bruyette & WoodsUpgrades21.0
COTYBMO CapitalUpgrades12.0
ECCOppenheimerDowngrades0.0
VYGRRaymond JamesUpgrades0.0
ATNXJP MorganUpgrades15.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Any Permian Fall-Off For Helmerich & Payne Is Shallow, Jefferies Says In Upgrade

Pressure Mounts: President Doubles Down On Tariff Threat To China