Morgan Stanley Equal-Weight On Time Warner Cable

Morgan Stanley is out with a research report on Time Warner Cable Inc TWC and it has an Equal-Weight rating and a $81 price target on shares. In a note to clients, Morgan Stanley writes, "We are reiterating our Equal-weight rating on TWC and increasing our price target to $81 as we move from a YE'11 to a midyear ‘12 PT. We continue to like: (1) management's financial discipline, using accretive share repurchases as the standard against which M&A activity is judged; (2) TWC's strong expected equity shrink, as we project they can buy back ~30-35% of YE'10 shares over the next 3 years (‘11E-‘13E), at the upper end their cable and satellite peers. However, we remain Equal-weight because TWC's capital allocation strategies are reflected in its premium EV / Unlevered FCF multiple (15-16x vs. 12-17x range for cable/sat group), and we do not see upside to estimates this year. We prefer OW CHTR – where higher leverage, more attractive tax assets, and the potential for fundamental improvement is higher." Shares of TWC lost 17 cents on Friday too close at $77.29.