Analysts Offer Insights on Services Companies: Time Warner Inc (NYSE: TWX) and S&P Global Inc (NYSE: SPGI)

By Carrie Williams

There’s a lot to be optimistic about in the Services sector as 2 analysts just weighed in on Time Warner Inc (NYSE: TWX) and S&P Global Inc (NYSE: SPGI) with bullish sentiments.

Time Warner Inc (NYSE: TWX)

In a report released today, Alan Gould from Brean Capital reiterated a Buy rating on Time Warner Inc (NYSE: TWX), with a price target of $102. The company’s shares opened today at $87.15.

Gould said:

“Our $102 price target is a small discount to the value offered by AT&T as we believe the deal will pass regulatory scrutiny. On pure fundamentals, we project TWX would be trading around $90 at this time next year, 15x our $6.00 EPS estimate for 2017, so we see very little downside for TWX shares relative to the market. Furthermore, should the T deal fall apart, we believe there could be other bidders for the company which would help put a floor under the stock price. The Turner networks are well positioned for an evolution to skinny bundles with 85-90% of the revenue generated by 4 networks and enough sports to make them must-have cable networks. HBO, an a la carte network with an OTT offering, should be relatively immune to cord cutting.”

According to TipRanks.com, Gould is a 4-star analyst with an average return of 4.8% and a 67.6% success rate. Gould covers the Services sector, focusing on stocks such as 21st Century Fox, AMC Networks, and Viacom Inc.

Currently, the analyst consensus on Time Warner Inc is Moderate Buy and the average price target is $99.05, representing a 13.7% upside.

In a report issued on October 19, Deutsche Bank also reiterated a Buy rating on the stock with a $95 price target.
S&P Global Inc (NYSE: SPGI)

In a report released today, Joseph Foresi from Cantor Fitzgerald reiterated a Buy rating on S&P Global Inc (NYSE: SPGI), with a price target of $139. The company’s shares opened today at $122.50.

Foresi wrote:

“3Q16 revenue and EPS easily top expectations. Total revenue was $1,439 mn, up 8.7% y/y, vs. the FactSet consensus of $1,419 mn. S&P Ratings was well above estimates as significant Issuance growth in August and September drove an impressive quarter for the business. S&P Global Platts, which was formerly the Commodities & Commercial business, declined in the period as the J.D. Power business was sold a little after one month into the period. Adjusted EPS of $1.43 was up 20.9% y/y, vs. the consensus of $1.34. EPS beat was driven by the revenue beat and lower-than-expected adjusted operating expenses ($801 mn. vs. $807 mn.). Adjusted operating margin was 44.3%, from 39.9% in 3Q15; margins improved y/y in all business segments except Dow Jones Indices. S&P Rating Services (45% of revenue) outperforms. 3Q16 Ratings revenue was $642 mn, up 9.4% y/y, vs. consensus of $614 mn. Transaction revenue grew 8% to $522 mn, driven by improved contract terms and increases in corporate debt issuance, bank loan ratings, and U.S. public finance issuance. Non-transactional revenue was up 9%. Domestic was up 9%, while international was up 8%.”

According to TipRanks.com, Foresi is ranked 0 out of 5 stars with an average return of -8.2% and a 28.5% success rate. Foresi covers the Technology sector, focusing on stocks such as Automatic Data Processing, Fidelity National Info, and Computer Sciences.

S&P Global Inc has an analyst consensus of Strong Buy, with a price target consensus of $142.