Following the announcement Friday that Comcast (CMCSA) and Time Warner Cable (TWC) will sell spectrum leases to Verizon Communications (VZ) for $3.6 billion, and partner with Verizon to offer new products and services, Stifel Nicolaus’s Christopher King this morning raised his rating on both stocks to Buy from Hold, arguing
King assigns Comcast a $32 price target, and assigns Time Warner an $80 target.
The deal will allow Comcast and Time Warner to fill gaps in their product line by reselling Verizon services, and at the same time it will also take them out of competition with wireless, he writes.
We believe this type of arrangement is likely to be transformative for the competitive dynamics of both the telco and cable industries. Cable will finally (after at least four attempts and failures of re-selling wireless services), have a viable national wireless product with the unquestioned industry leader in the marketplace, while Verizon will have access to offer cable�s industry-best HSD product (both in areas inside and outside FiOS territories).
Comcast shares this morning are up 14 cents, or 0.6%, at $23.50. Time Warner shares are up 22 cents, or 0.3%, at $64.01.
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