Time Warner (TWX) Stock Falls on Bank of America/Merrill Lynch Downgrade

Time Warner (TWX) stock is declining in mid-morning trading on Thursday, after a downgrade to 'neutral' from 'buy at Bank of America/Merrill Lynch this morning.
By Rachel Graf ,

NEW YORK (TheStreet) -- Time Warner (TWX) stock is declining by 1.32% to $71.25 in mid-morning trading on Thursday, following a downgrade to "neutral" from "buy" at Bank of America/Merrill Lynch this morning. 

The media and entertainment company reported mixed 2015 third quarter earnings results on Wednesday, but advertising growth could improve in the fourth quarter, the firm said in a note. 

Even so, the company's reduced fiscal 2016 guidance, announced yesterday, prompted the firm to downgrade the stock, according to the note. 

The lowered forecast was "not entirely surprising," but the "TWX story appears catalyst light" and needs time to play out, BofA/Merrill Lynch adds.

On Wednesday, the company posted earnings of $1.25 per share on revenue of $6.56 billion for the most recent quarter. Analysts surveyed by Thomson Reuters had forecast for earnings of $1.09 per share on revenue of $6.51 billion.

Time Warner now expects 2016 adjusted earnings of $5.25 per share, down from an earlier forecast of "close to $6," Reuters reported.

Separately, TheStreet Ratings team rates TIME WARNER INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate TIME WARNER INC (TWX) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

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

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Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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