Time Warner (TWX) Stock Down, Drexel Lowers Earnings Estimates

Time Warner (TWX) earnings estimates were lowered at Drexel this morning, ahead of the company's second quarter fiscal results announcement before the market opens on August 3.
By Natalie Walters ,

NEW YORK (TheStreet) -- Shares of Time Warner (TWX) are down by 0.57% to $77.93 in mid-morning trading on Tuesday, as DrexelHamilton lowered the company's earnings estimates for 2016 and 2017 to $5.38 from $5.50 per share, and to $5.89 from $6.08 per share, respectively. 

Additionally, the firm lowered the New York-based media and entertainment company's price target to $86 from $88.

The reductions come in anticipation of Time Warner's second quarter fiscal earnings announcement, according to the analyst note. The company is expected to report earnings before the market opens on August 3 for the fiscal quarter ending June 2016.

"We see slightly better ad revenue, but are less confident on the timing of HBO digital revenue, we anticipate higher intercompany eliminations and expect a more moderate acceleration of affiliate fees," Drexel said. 

Despite the lowered estimates and price target, the firm maintained its "buy" rating on Time Warner because it still believes "TWX is better positioned in the TV ecosystem given its concenetration of stronger TB networks, sports rights leverage, the HBO Now cord cutting hedges, and strong studio operations." 

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate TIME WARNER INC as a Buy with a ratings score of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, notable return on equity and attractive valuation levels. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

You can view the full analysis from the report here: TWX

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