Repeating AOL Time Warner's Accumulate Rating
AOL Time Warner (AOL ): Repeating 4 STARS (accumulate)
Analyst: Scott Kessler
The Internet and media conglomerate's conference call is set for Monday Jan. 7 with speculation rampant about what AOL will disclose during the meeting. Kessler says the shares are trading down on the prospect that the company will reduce 2002 guidance for revenue, EBITDA and cash earnings per share.
Kessler says the the call is not identified as to fourth quarter results, and he sees AOL taking the opportunity to address a number of concerns regarding growth, broadband, AOL Europe and the impact of the repurchase of the Bertelsmann stake on the balance sheet. Although he believes AOL may take a less aggressive stance on its 2002 outlook, he expects the company to clarify uncertainties and assuage worries.
American Express (AXP ): Raising to 4 STARS (accumulate) from 3 STARS (hold)
Analyst: Robert McMillan
McMillan sees shares of the financial services giant poised to outperform the market over the next 6-12 months, based on a view that the economy is emerging from a recession. Travel-related business should benefit from improving consumer/business spending, he says, while the company's financial advisory business should be aided by improving investor confidence and capital markets.
McMillan says the generally benign interest rate environment and continued aggressive cost cutting should also contribute to higher profitability. He sees earnings per share rising to $1.99 in 2002 from an estimated $0.97 in 2001.
Charter Communications (CHTR ): Raising to 4 STARS (accumulate) from 3 STARS (hold)
Analyst: Howard Choe
Choe is raising the rating on the cable tv services company as he sees the company as a likely beneficiary of industry consolidation. In the wake of the proposed AT&T Broadband/Comcast merger, Charter could be an attractive acquisition target, he says. He says the fourth largest cable operator has performed well in a soft economy.
The company has the highest digital cable penetration in the industry and is aggressively deploying video-on-demand, he says. Charter is attractively valued at an enterprise value 12.4 times EBITDA, and per-subscriber value of $3,800. Also, given that Comcast acquired AT&T subscribers at $4,500 each, he see solid potential for appreciation in Charter shares.
Tenet Healthcare (THC ): Keeping at 5 STARS (buy)
Analyst: Robert Gold
The hospital operator blew past Gold's bullish November quarter earnings per share estimate of $0.74 a share, posting operating earnings per share gain of 43% to $0.77, he says. Positive trends continued, most notably the shift towards higher acuity patient admissions in cardiology, orthopedics and neurology. The move helped drive same-facility net inpatient revenue per admission up 14.9%, he says. Cost controls pushed EBITDA to 20.0% vs. 18.4%.
With interest costs falling, THC generated $1.3 billion free cash flow over past 12-months. Company now sees fiscal year 2002 (May) earnings per share of at least $3.10, representing 35% year-to-year advance.