|
AOL, TWX shares surge
|
 |
February 23, 2000: 11:05 a.m. ET
Stocks post gains on Merrill Lynch analysts' recommendations
|
NEW YORK (CNNfn) - Shares of America Online and Time Warner leapt Wednesday following the release of a research report by influential Merrill Lynch analyst Henry Blodget.
In early trading, Time Warner (TWX: Research, Estimates) rose 7.4 percent or 5-7/16, to 79 and America Online (AOL: Research, Estimates) jumped 8.7 percent, or 4-5/16, to 53-15/16. Time Warner is the parent company of CNNfn.com.
Blodget's report, "You've Got Upside!" is Merrill Lynch's first formal analysis of the merged company. Blodget maintained a "buy" rating on AOL stock, while Merrill analyst Jessica Reif Cohen reinstated Time Warner with a "buy" rating.
"We view this as an excellent buying opportunity...we are indifferent as to which stock investors buy," Blodget said in the report.
"We continue to believe the merger will prove a strong combination, one that increases the value of both companies and facilitates (1) operating synergies
(2) the transformation of existing businesses and (3) the launch of new businesses."
The analysts put a 12-18 month price target for AOL at $90, an increase of 83 percent from current levels. The 12-18 month price objective for Time Warner is $135, an upside of 81 percent from current levels.
Blodget also wrote that because of the rapidly changing Internet industry, valuation arguments are less compelling than competitive positioning.
"We also do not believe that an appropriate comparable or valuation methodology for this company exists...over time we believe the new AOL Time Warner will trade as a hybrid technology and media stock."
"If any mega-merger of this size can work, this one can," Blodget said. 
|
|
|
|
|
|
AOL
Time Warner
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
