Analyst Ted Henderson of Stifel Nicolaus raised the stock to buy from market perform and set a $4 price target. He said the St. Louis cable operator's recent
10-K filing and earnings restatement dispelled much of the doubt surrounding the Charter story.
Henderson also wrote in a Friday morning report that he believes the ongoing grand jury and
Securities and Exchange Commission
probes of the company won't result in any findings that could stand in the way of a desperately needed debt restructuring. Henderson owns Charter debt and Stifel, a St. Louis broker whose equity research arm is based in Denver, makes a market in Charter shares.
Charter shares rose 16 cents Friday to $1.61. The stock remains more than 80% off its 52-week high amid worries about its massive debt load, the various investigations and the recent firing of
two top executives. Indeed, there has been some concern that with its heavy debt overhang and government investigations, Charter could come to resemble
, the Pennsylvania-based operator that filed for Chapter 11 protection after authorities charged its founding Rigas family with looting the company.
Still, Charter continues to have its fans. For one thing,
billionaire Paul Allen is its largest shareholder, and his continued investment in the company has persuaded some investors that Charter is about to turn the corner. Indeed, Henderson said that on a restated basis, Charter's 2002 numbers "compared favorably with the rest of the broadband cable industry."
Even so, the company's challenges can't be overstated. Even the bullish Stifel report notes the risk of serious findings in the investigations or in various shareholder lawsuits against Charter. And Henderson's buy rating and $4 price target are based in part on the assumption that Allen will persuade holders of the company's convertible debt to take a nearly 90% haircut in order to make a restructuring work and keep Charter from having to file Chapter 11.