The firm set a price target of $78 for the media and entertainment company, up from its previous mark of $74.
BMO raised annual EPS estimates to $4.18 from $4.00 for fiscal 2014, and to $4.73 from $4.55 for fiscal 2015.
The firm also adjusted annual CFPS (cash flow per share) estimates to to $3.97 from $4.48 for fiscal 2014, and to $5.30 from $5.13 for fiscal 2015.
BMO said it reiterated Time Warner's "market perform" rating because the company is cutting costs and buying back stock.
"We believe valuation accurately reflects the opportunities across Time Warner's businesses, and we expect ample share buybacks to continue to support the stock price," said BMO analyst Daniel Salmon.
Shares of Time Warner are down 1.01% to $77.22 in early morning trading.
Separately, TheStreet Ratings team rates TIME WARNER INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate TIME WARNER INC (TWX) a BUY. 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 revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 8.3%. Since the same quarter one year prior, revenues slightly increased by 2.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.87, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, TWX has a quick ratio of 1.59, which demonstrates the ability of the company to cover short-term liquidity needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Media industry and the overall market, TIME WARNER INC's return on equity exceeds that of both the industry average and the S&P 500.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: TWX Ratings Report