Time Warner outlook unclear

Confusion over what Comcast will be allowed or willing to do continues to cloud the short-term picture for Time Warner. 

A CNN logo - the broadcaster is owned by Time Warner
Source: Bloomberg

On Wednesday 11 February Time Warner is due to post its fourth-quarter figures. The company’s adjusted earnings per share are called lower, falling from $0.97 to $0.94 while in contrast sales are expected to rise from $6.243 billion to $7.533 billion. This should lead to a big jump in the company’s pre-tax profits from $529 million up to $1.238 billion. The year-on-year fourth-quarter profits are weaker than 2013’s figure of $1.491 billion.

Time Warner has firm institutional support with 28 analysts giving the company a buy rating, 11 a hold and at present none rating the company a sell.

It has been a turbulent year for the media and entertainment company as the prospect of a Comcast takeover appeared and disappeared almost as quickly. In mid-July last year the shares shot up to $87 before quickly dropping back down to $74 then spent the next four months retracing those steps. This deal is now no longer on the table, but the attraction of Time Warner has been highlighted more broadly, increasing its appeal to investors.

There is still a chance that some form of takeover or amalgamation could materialise, but with regulators still unsure of how they want the cable player landscape to look like, a decision might not be reached in the short term.

The $87 level for the time being looks like an obvious area of resistance, while the 200-day moving average should tempt the buyers back in.

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