Holly Energy Partners (HEP) cut from Buy to Neutral.
Time Warner Cable (TWC) started as Neutral; sets $1.10 EPS for this year and $1.50 EPS target for next year.
Earnings estimates RAISED: Chaparral Steel (CHAP), Commercial Metals (CMC), J.Crew (JCG), Hertz (HTZ), Boston Beer (SAM), HFF (HF), Sepracor (SEPR), Qualcomm (QCOM), Sapient (SAPE).
Earnings estimates DECREASED: Time Warner (TWX), Spanish Broadcasting (SBSA), Centene (CNC), Schnitzer Steel (SCHN), Holly Energy Partners (HEP).
Goldman Sachs also maintains its neutral rating on US Housing sector, while valuations of 1.1 times book value would normally make them want to go long the group; while they feel sub-prime is mostly contained Goldman is marginally less positive on home sales for Spring because of tightening credit standards.
Time Warner Cable (TWC): consistent with Goldman Sachs positive view of cable sector, they see TWC leveraging secular trends of triple-play and increased scale to drive EBITDA consolidated annual growth rates averaging 10% for 2008 to 2011. Goldman has positive view of above average growth in TWC, they rate it Neutral with a $44 target. This is an implied 20% upside, which compares to 30% upside in Comcast (CMCSA) shares at current levels.
Time Warner Inc. (TWX) was maintained Neutral at Goldman Sachs, and they are incorporating the TWC/TWX split changes into the Time Warner model; stock maintained Neutral. This has a slight dilutive effect to 2007 to 2009 earnings: 2007 $1.05 down to $0.96; 2008 $1.27 down to $1.15; and 2009 $1.49 down to $1.39. These estimates are from dilution and from depreciation expenses in TWC unit. This compares to TWX consensus of $0.99 for 2007 and does not yet include the TWC standalone guidance.
Jon C. Ogg
March 14, 2007
Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.
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