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Charter Overcomes Organizational Disruption To Post A Solid Quarter

Deutsche Bank maintained its Buy rating and raised its price target by 5.3 percent on Charter Communications, Inc. CHTR shares following the company's solid second quarter results despite organizational disruption and potential for management distraction.

The company's quarterly Pro Forma revenue and EBITDA exceeded DB estimates by 1 percent and 3 percent, respectively, driven by higher revenue, and expenses that were in line with DB forecast.

"We find CHTR to be an attractive multi-year FCF growth story combined with a levered capital structure, a combination that should generate a mid-teens annual compounded return on the share price through 2021 off of our $300 PT," analyst Bryan Kraft wrote in a note.

Kraft raised his EBITDA estimates for 2016-2018 by about 2 percent, helped by lower operating expenses and higher revenue. The analyst also increased his capex forecast by about 3 percent in 2017 and 2018, and decreased it by 2 percent in 2016, to reflect the timing of planned all-digital conversions in the acquired operations.

Management updated synergy guidance, indicating it would exceed $800 million in three years, and that would achieve an annual run rate savings of $600 million at the end of the first year following merger completion.

Kraft raised his price target on the stock by $15 to $300, while the shares of Charter gained 0.94 percent to $256.46.

Aug 2016Deutsche BankMaintainsBuy
Aug 2016JefferiesMaintainsHold
Aug 2016UBSMaintainsBuy

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