The investors clearly have their doubts regulators will approve a Comcast/Time Warner Cable merger, cable infrastructure/set-top vendor Arris (ARRS +4.9%) and TV Everywhere software provider Synacor (SYNC +3.4%) are both rallying on hopes a post-merger Comcast will direct more capex their way.
Jefferies calls a Comcast/TWC deal a "very positive event" for Arris, given the company's strong relationship with Comcast, its relatively low set-top/infrastructure share at TWC, and the potential for Comcast to ramp capex after the deal closes.
Arris, which reports in six days, rallied yesterday thanks to a Brean PT hike, but gave up its gains following a Bloomberg report stating an Apple TV set-top supporting pay-TV content is on tap, and that talks are ongoing with TWC.
Jefferies declares itself unconcerned about Apple's impact on Arris, arguing it isn't clear Apple's box will fully replace a traditional set-top and that Comcast remains committed to its X1 platform.
Arris is gaining even though rival Cisco has reported a 20% Y/Y drop in service provider video orders, thanks largely to plunging set-top sales. Cisco says it has been walking away from some low-margin set-top deals.