Analysts Chime In On Time Warner, AT&T Merger Mayhem

Time Warner shares were oversold heading into today's trading

Nov 21, 2017 at 10:01 AM
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Analysts are weighing in on media stocks -- and merger hopefuls -- Time Warner Inc (NYSE:TWX) and AT&T Inc. (NYSE:T), as well as fellow telecommunications name Verizon Communications Inc. (NYSE:VZ). Here's a quick roundup of today's bearish brokerage notes on shares of TWX, T, and VZ.

Oversold Time Warner Stock Bounces

Time Warner shares are up 0.6% to trade at $88.25, even as Barclays cut its price target on the stock to $92 from $107 and Wells Fargo dropped its target to $84 from $100. Since mid-October, TWX has been selling off -- down 15% since its Oct. 5 16-year high of $103.90 -- amid an onslaught of headlines relating to its proposed merger with AT&T, most recently with the U.S. Justice Department filing a lawsuit to block the $85 billion buyout agreement. As such, TWX stock's 14-day Relative Strength Index (RSI) closed last night at 30, signaling the equity was oversold and likely due for a short-term bounce.

AT&T Stock Slapped With Price-Target Cuts

AT&T stock was hit with price-target cuts at Instinet (to $42) and HSBC (to $38), though the shares have still managed to add 0.2% at $34.70. It's been a rough stretch for the security, which is down nearly 16% since breaching its 200-day moving average in early April -- and a recent test of this trendline in early October eventually sent the shares spiraling to a nearly two-year low of $32.55 on Nov. 6. While T has climbed off of this low, its descending 30-day moving average appears to be emerging as newfound resistance.

With uncertainty swirling around AT&T's possible buyout of Time Warner, most analysts are sitting on the sidelines. Of the 20 brokerages following T, 13 maintain a tepid "hold" recommendation.

Verizon Stock Brushes Off Bearish HSBC Note

HSBC also weighed in on Verizon, lowering its price target on the Dow stock to $52 from $54 -- though this still sits at a premium to last night's close at $46.20. At last check, VZ shares were up 0.2% at $46.29, extending their recent bounce off their mid-November lows near $44.

Nevertheless, the shares have underperformed the broader stock market in 2017, down 13% year-to-date, and options traders in recent weeks have been initiating bearish bets relative to bullish ones at an unusual pace. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), VZ stock's 10-day put/call volume ratio of 0.69 ranks higher than 80% of all comparable readings taken in the past year.

 

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