The Zacks Analyst Blog Highlights:American International Group, Comcast, Time Warner Cable, Charter Communications and Liberty Media

Jan 23, 2014, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Jan. 23, 2014 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the American International Group Inc. (NYSE: AIG-Free Report), Comcast Corp. (Nasdaq: CMCSA-Free Report), Time Warner Cable Inc. (NYSE: TWC-Free Report), Charter Communications Inc. (Nasdaq: CHTR-Free Report) and Liberty Media Corp. (Nasdaq: LMCA-Free Report).


Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday's Analyst Blog:

AIG Upgraded to Outperform

On Jan 21, we upgraded life and property-casualty (P&C) insurer – American International Group Inc. (NYSE: AIG-Free Report) to Outperform based on the successful restructuring of its operations with the divestment of its aircraft leasing unit – International Lease Finance Corporation (ILFC).

Why the Upgrade?

Estimates of AIG have risen ahead of its fourth-quarter 2013 earnings results, following the long pending divestment of ILFC to AerCap Holdings in an attractive deal worth $5.4 billion, expected to close by mid-2014. ILFC is the only major-most asset left for disposition at AIG, paving way for increasing capital flexibility.

Alongside, the improved insurance fundamentals and financial leverage in 2013 have also sustained growth. These factors also bode well for efficient capital deployment.

Although a deteriorated investment portfolio amid intense competition and low interest rate environment raise some risks going ahead, we expect the company to benefit from its scale of operations, pricing improvements and disciplined expense management in the upcoming quarters along with a recovery in the economy.

On Oct 31, AIG reported its third-quarter 2013 results, wherein, both operating earnings of 96 cents per share and total revenue of $14.83 billion topped the Zacks Consensus Estimate of 93 cents and $10.1 billion, respectively.

However, both earnings and revenues lagged the year-ago results by 3.0% and 11.3%, respectively. Overall, AIG delivered positive earnings surprises in all the last 4 quarters with an average beat of 102.4%.

The Zacks Consensus Estimate for 2013 inched up 0.9% to $4.38 per share in the last 60 days. The same for 2014 was pegged at $4.26 a share, up 0.5% during the same period.

With the Zacks Consensus Estimate for both 2013 and 2014 trending upward, the company now has a Zacks Rank #2 (Buy).

Is Comcast Pursuing Time Warner Cable?

Yesterday, Reuters reported that Comcast Corp. (Nasdaq: CMCSA-Free Report) is considering all strategic options to acquire full or partial control of Time Warner Cable Inc. (NYSE: TWC-Free Report). Recently, the company selected Barclays Plc. as an advisor to evaluate the deal.

Earlier, Comcast had hired JPMorgan Chase & Co. as its adviser. Both JPMorgan and Barclays will now evaluate the Time Warner Cable acquisition deal.

Last week, Charter Communications Inc. (Nasdaq: CHTR-Free Report) offered a fresh bid to acquire Time Warner Cable. The company offered $132.50 per share of Time Warner Cable, including $83 in cash and $49.50 in Charter stock.

The total size of the deal is approximately $62.35 billion. Excluding debt, the deal size is around $37.3 billion. The existing Time Warner Cable stockholders will gain a 45% control of the merged entity.

However, the board of directors of Time Warner Cable unanimously rejected the offer from Charter on grounds of inadequacy. This is the third rejection in the last one year.

Time Warner Cable intends to thoroughly evaluate whether the deal will add sufficient value to its investors before finalizing. Several industry researchers have estimated that the offer size may go up to $160-$162 per share.

The news of a proposed merger between Charter Communications and Time Warner Cable first surfaced after Liberty Media Corp. (Nasdaq: LMCA-Free Report) acquired a 27.3% stake in the former.

Liberty Media is aggressively pursuing the idea of Charter Communications acquiring a major cable TV operator in the U.S., such as Time Warner Cable.

We believe Comcast may offer higher bids for Time Warner Cable, however, the deal may face severe regulatory hurdles from antitrust authorities.

Comcast and Time Warner Cable are the first and second largest cable TV operators in the U.S., respectively. A merger between the two entities may create monopolistic power in the industry. Currently, both Comcast and Time Warner Cable have a Zacks Rank #3 (Hold).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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