Wall Street turns more bullish on AOL
By Jon Friedman, CBS.MarketWatch.com
Last Update: 10:08 AM ET June 27, 2003
NEW YORK (CBS.MW) -- These are hopeful times for AOL Time Warner shareholders.
Wall Street is suddenly turning bullish on the world's biggest media company, which until recently looked to investors like the world's most troubled media organization.
Morgan Stanley and Bear Stearns on Friday lifted their views of AOL (AOL: news, chart, profile), citing improvements in what's been a woeful performance turned in by its America Online division.
Morgan Stanley raised its price target on AOL to $19 from $17. Bear Stearns said it was raising second-quarter and full-year projections by moving up its forecast for EBITDA (earnings before interest, taxes, depreciation and amortization, which is a way of measuring cash flow) for the quarter by $72 million to $2.3 billion.
This marks a turnaround. For most of the past few years -- indeed, ever since America Online and Time Warner completed their merger in January 2001 -- analysts have been beating up the Manhattan-based company and noting every decline in the stock price.
The culprit was America Online, whose growth has showed. It has also been at the heart of a Securities and Exchange Commission investigation into questionable business practices. Plus, America Online has had to make the transition from stressing its dial-up service to broadband as a way to attract new customers and retain the 35 million people who now use America Online services.
Now, Morgan Stanley cited "management's ability to stabilize the AOL division." And Bear Stearns pointed out: "Driving our second-quarter estimate revisions are stronger-than-expected performances at America Online..."
Analysts are also bullish on AOL's publishing, movie and cable businesses.
Such securities firms as Gerard Klauer Mattison, First Albany and Citigroup also issued positive comments about AOL earlier this month.
Against this backdrop, AOL's stock rose 32 cents, or 2 percent, to $16.20 in recent dealings Friday. |
