5.9 C
New York
Friday, March 29, 2024

FYI: AT&T Usually Trades Sideways After Big Deals, Outperforms The Year After

Courtesy of Benzinga.

FYI: AT&T Usually Trades Sideways After Big Deals, Outperforms The Year After

Confirming speculations, AT&T Inc. (NYSE: T) announced that it had reached an agreement to acquire Time Warner Inc (NYSE: TWX) for $85.4 billion or $107.50 per share.

Oppenheimer’s Timothy Horan maintains a Buy rating on AT&T, with a price target of $46.

What The Merger Means

“The merger allows T to combine leadership in distribution with a portfolio of high-quality content,” Horan mentioned, while adding that the deal was expected to be 4 percent accretive to AT&T’s EPS and free cash flow per share in 2018, with $1.5 billion in pretax synergies.

Related Link: Jim Stewart: AT&T-Time Warner Deal Has A 98% Chance Of Regulatory Approval

“T’s stock usually trades sideways while large transactions are announced with outperformance the year after closing, which should take nine months,” the analyst went on to say.

Expectations

The deal requires a review by the Department of Justice (DoJ), and Horan pointed out that the DoJ has never rejected a vertical merger, although there is likely to be meaningful “political noise” around the acquisition.

However, the analyst also believes that the merger would be positive for towers, fibers, datacenters and CDNs.

Horan believes this acquisition is in line with AT&T’s goal of growing OTT video, especially over mobile, which could help reduce churn.

The analyst also stated, “The transaction is somewhat defensive as the hyper-scale Internet companies are also looking to provide OTT video services,” and that controlling content would allow the company to create a more differentiated service, along with ensuring better control costs.

At last check, AT&T was down 1.52 percent at $36.92, while Time Warner was down 2.26 percent at 87.45.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you’d like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for T

Date Firm Action From To
Oct 2016 Drexel Hamilton Downgrades Buy Hold
Oct 2016 Cowen & Co. Downgrades Outperform Market Perform
Sep 2016 UBS Downgrades Buy Neutral

View More Analyst Ratings for T


View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas News Reiteration M&A Analyst Ratings Movers Tech Best of Benzinga

Subscribe
Notify of
0 Comments
Inline Feedbacks
View all comments

Stay Connected

157,449FansLike
396,312FollowersFollow
2,280SubscribersSubscribe

Latest Articles

0
Would love your thoughts, please comment.x
()
x