- Barclays' Kannan Venkateshwar has raised the firm's price targets on merger partners Charter Communications (CHTR -0.8%) and Time Warner Cable (TWC -0.7%), noting growing operating leverage and what looks like a conservative take on synergies.
- The price target on Charter was raised to $204, from $157. Based on that, Venkateshwar raised the target on Time Warner Cable to $206, from $166.
- Time Warner Cable is currently trading at $186.63, implying more than 10% upside, while Charter's trading at $180.28, implying more than 13% upside.
- Charter's seeing operating leverage for the first time after years of investment, Venkateshwar says, boosting confidence that it could generate earnings growth after engulfing TWC and Bright House Networks.
- Venkateshwar estimates synergies close to a $1B, higher than Charter's guidance to $800M, and believes the company may be able to boost better margin expansion -- closer to that of Comcast.