Cablevision: Morgan Upgrades; No Longer Bearish On Cable Sector

Cablevision (CVC) shares received a modest lift today from Morgan Stanley analyst Benjamin Swinburne, who this morning moved his rating on the stock to Oveweight from Equal Weight, while lifting his stance on the cable and satellite sector overall to In Line from Cautious.

Swinburne gave three reasons for his more bullish stance on the sector:

• He is bullish on residential data prices, “due to a stable competitive environment and rising usage.” Swinburne notes that Comcast recently pushed through a $2 hike in cable modem rental fees; while Canada-based Shaw raised core data prices by $2 (Canadian) a month. “Stable duopolies structure should ensure rational pricing, and we believe that 4G wireless is unlikely to disrupt wireline market in medium-term,” he writes.


• He notes that the industry is seeing falling capital intensity with adoption of the DOCSIS 3 standard “delivering the next gen of speeds at minimal costs.”


• And he sees new opportunity in the enterprise, particularly small- and medium-sized companies.

As for Cablevision specifically, Swinburne writes in a research note that he has “increased confidence that CVC is committed to rational capital allocation, which should help to drive equity valuation.” He also cited the company’s below-peer capital intensity, and pricing power in broadband.

CVC today is up 50 cents, or 2%, to $24.05.