Charter Communications Succeeds In Turnaround Effort, Wells Fargo Says In Upgrade

A successful turnaround and a rebound in Time Warner Cable subscriptions has renewed an analyst's confidence in Charter Communications, Inc. (NYSE: CHTR) despite a competitive environment. 

The Analyst

Wells Fargo analyst Marci Ryvicker upgraded Charter Communications from Market Perform to Outperform and raised the price target from $359 to $460.

The Thesis

A “meaningful pivot” in Time Warner subs was an important driver in parent company Charter’s turnaround and, and Ryvicker said she now expects Charter to continue on an upward trajectory.

Time Warner sub losses peaked in the first quarter of 2017 but have been consistently improving since then, the analyst said in a Sunday note.

“We know this stock has moved 15 percent YTD, but by no means do we think this is over." 

Charter's management has “regained credibility” after turnaround efforts, limiting future volatility, Ryvicker said. 

A potential sale of Charter has been factored into Wells Fargo's analysis; Sprint Corp (NYSE: S), Verizon Communications Inc (NYSE: VZ) and Softbank have been named as potential suitors, Ryvicker said. The potential of such a deal “provides a certain level of comfort” should the primary thesis fail, she said. 

Price Action

Shares of Charter were down 3.81 percent at $372.74 late in Monday's trading session during a down day for the overall market. 

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