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Analyst Blog

Shares of Time Warner Inc. (TWX - Analyst Report) recorded a new 52-week high of $60.30 yesterday, before closing at $60.19, rising approximately 21.6% year to date. Based on the current price, this media and entertainment company is 2.2% above the Zacks Consensus average analyst price target of $58.90.

Moreover, it currently trades at a forward P/E of 16.38x, at par with the peer group average. Additionally, the company’s long-term estimated EPS growth rate is 10.6%, which is relatively healthy.

Time Warner has been expanding its digital presence, enabling consumers to enjoy its content through numerous platforms and devices. Alongside, it has entered into several content distribution deals with Time Warner Cable Inc. (TWC - Analyst Report) and Netflix, Inc. (NFLX - Analyst Report), which strengthen its multichannel subscription model by adding more platforms to deliver its content.

Meanwhile, Warner Bros. became the first movie studio to offer video on demand, and acquired Flixster, a movie search application on smartphones and mobile devices. The company also launched a digital movie technology, UltraViolet, via which consumers have the choice to watch movies on their preferred Internet-connected devices. The device is available in the U.S., Canada and UK. Presently, the company plans to launch the technology in Australia, France, Germany, Irelandand New Zealand.

Time Warner has been actively managing its cash flows returning much of its free cash to shareholders via dividend and share repurchases. During the last reported quarter, the company generated free cash flow of $990 million. Time Warner hiked its quarterly dividend by 11% to 28.75 cents a share and also announced a new share buyback plan of $4 billion.

Going forward, this Zacks Rank #3 (Hold) stock projects low double-digit growth rate in earnings per share for 2013.  Alongside, one of its peers News Corporation (NWSA - Analyst Report) crafted a new 52-week high of $31.75, yesterday.

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