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What Propelled Time Warner (TWX) to Attain New 52-Week High?

Time Warner Inc. TWX hit a fresh 52-week high of $100.67 on Jun 30, eventually closing at $100.41. We believe that the company’s foray into new markets, strategic investments and digital endeavors have helped the stock attain new highs.

We also observed that shares of this diversified media conglomerate have moved up 35.1% in the last one year, and have not only outperformed the Zacks categorized Media Conglomerates industry but also the broader sector. While the industry has advanced 7.4%, the broader Consumer Discretionary sector gained 16.6%.

Let’s delve deeper into the factors that have been helping the company’s shares to surge and exhibit a sturdy performance.

Strategic Initiatives and Augmenting Digital Presence

Time Warner’s significant international presence has helped it to broaden its client base and product portfolio. Moreover, rising demand of its content from distributors and other cable or satellite providers is augmenting revenues. Moreover, Game of Thrones is all set to return for its highly anticipated seventh season on Jul 16 and will be premiered on HBO.

The company has also improved its streaming and video-on-demand service through FilmStruck, which features the largest streaming library of Contemporary & Classic Arthouse, Indie, Foreign & Cult Films. Turner and Warner Bros. together launched new domestic premium video subscription service – Boomerang – that offers over 5,000 animated titles on a streaming platform.

In an effort to draw more young audience and increase advertising revenues, Time Warner clichéd a deal with Snap Inc. Per the terms of the deal, Time Warner will create and produce 10 original shows like scripted dramas, documentaries and comedies annually over the next two years. Following the deal, the number of shows on Snapchat will increase to three per day from one by the end of 2017. Snap has previously inked similar deals with Comcast Corporation’s CMCSA NBC Universal and The Walt Disney Company’s DIS ABC Networks.

Further, Time Warner’s Turner Broadcasting and CBS Corporation extended the rights to air The National Collegiate Athletic Association (NCAA) Men's Division I Basketball Tournament, through 2032. With more viewership and higher advertising revenues, the company is well poised for top-line growth

Final Verdict

Time Warner’s strategic investments in video content and technology bode well. However, decline in overall advertising spending and currency headwinds may adversely impact the company’s performance. Technology advancements, rapid growth in new video services and shift in consumer viewing patterns also pose threats.

Nevertheless, Time Warner, which accepted the buyout offer of AT&T Inc. T, is also boosting broadband distribution capabilities. The combined entity will become a major player in the consolidated telecom-media space. The proposed merger with Time Warner will provide AT&T a portfolio of lucrative content.

Time Warner currently carries a Zacks rank #3 (Hold).

You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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Time Warner Inc. (TWX): Free Stock Analysis Report
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