Deutsche Bank: Bullish on Time Warner Cable, Bearish on Chevron

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Includes: CHTR, CVX
by: FP Trading Desk

Deutsche Bank has initiated coverage of Time Warner Cable Inc. (TWC) with a “buy” rating and US$46 price target, which represents upside of nearly 25%.

The firm thinks Time Warner shares could perform with the company’s addition of more digital telephone subscribers from Adelphia, more free cash flow from this acquisition which occurred last July, the launch of its small and medium sized enterprise business, as well as a push for advanced video services.

Deutsche Bank also thinks the stock could benefit from a valuation rebound for the entire sector on stronger industry fundamentals.

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While raising its 2007 earnings per share estimate for Chevron Corp. (NYSE:CVX) to US$6.88 from US$6.71, Deutsche Bank has maintained it “sell” recommendation and US$65 price target on the stock.

“We view Chevron as an intriguing mix of outstanding resource in patches, attendant huge potential in patches and project delivery, in patches,” the firm said in a research note.

Deutsche Bank also pointed out that of the five major projects Chevron said would drive volumes between 2005-2010, only one has been a success. Meanwhile, two are delayed but developing, and two clearly have major issues, the firm said.

While labeling much of the company’s prospects “patchy,” Deutsche Bank expects the same mixed result from Chevron’s upcoming analyst meeting.

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