Time Warner has realized success lately with its movie studio, Warner Bros., whose fourth installment of the Mad Max series, Mad Max: Fury Road, grossed $118 million domestically as of June 1. Box office numbers for Mad Max surpassed the take of Disney's (DIS) Tomorrowland, which was released a week later and has grossed $65 million domestically as of June. (Tomorrowland cost $190 million to produce, according to Box Office Mojo.)
Credit Suisse initiated coverage of New York-based Time Warner with a 12-month price target of $110. The share price of Time Warner was rising 1.4% on Wednesday, to $85.86, extending its advance for the year thus far to 0.5% compared with a 2.8% gain this year for the S&P 500.
The value of HBO and Warner Bros. will increase over time, and with it, the price of the company's shares, Sheikh said.
Among the company's most compelling properties is HBO Now, the standalone service that debuted in April. At the time, HBO CEO Richard Plepler said the offering was designed to attract viewers in the roughly 10 million U.S. homes with an Internet connection but without pay TV subscriptions as well as those in 70 million homes with pay TV but lacking HBO. A subscription to the streaming service costs $14.99 a month.