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AOL upped again
Shares of America Online jumped Thursday on an analyst's upgrade -- its second in two days as the stock's backers work to support the company in the wake of its Time Warner deal.
AOL (AOL: news, msgs) jumped as high as 62 early Thursday-- this after a 14 percent surge Wednesday when Merrill Lynch said it thought AOL's stock appeared "undervalued by almost any measure."
On Thursday, Credit Suisse First Boston's Lise Buyer upped her recommendation on the stock to a "strong buy," telling clients: "Enough already. We recognize that the synergies of the proposed merger may not be completely apparent for several years, but at current levels we believe the intervening time is fully discounted."
The Time Warner-AOL combination should "currently support a price between $88 and $97 when using management guidance of a $40 billion entity generating $10.5-11 billion EBITDA," she said further. EBITDA is a measure of cash flow.
She also sees annual music revenue rising to $700 million in the next four years, as well as gains from subscription revenue from magazines and broadband services.
On Wednesday, Merrill Lynch reiterated its "buy" rating on AOL with a $90 price target, or 28 times 2002 estimated cash flow. In the report, the Merrill analysts suggested investors consider the quickly "evolving industry" as reason to emphasize market dominance over valuation arguments. Even so, AOL shares at sub-50 prices were undervalued by any metric, according to the note.
On Thursday, AOL shares closed up 1 11/16 at 60.
Shares of America Online jumped Thursday on an analyst's upgrade -- its second in two days as the stock's backers work to support the company in the wake of its Time Warner deal.
AOL (AOL: news, msgs) jumped as high as 62 early Thursday-- this after a 14 percent surge Wednesday when Merrill Lynch said it thought AOL's stock appeared "undervalued by almost any measure."
On Thursday, Credit Suisse First Boston's Lise Buyer upped her recommendation on the stock to a "strong buy," telling clients: "Enough already. We recognize that the synergies of the proposed merger may not be completely apparent for several years, but at current levels we believe the intervening time is fully discounted."
The Time Warner-AOL combination should "currently support a price between $88 and $97 when using management guidance of a $40 billion entity generating $10.5-11 billion EBITDA," she said further. EBITDA is a measure of cash flow.
She also sees annual music revenue rising to $700 million in the next four years, as well as gains from subscription revenue from magazines and broadband services.
On Wednesday, Merrill Lynch reiterated its "buy" rating on AOL with a $90 price target, or 28 times 2002 estimated cash flow. In the report, the Merrill analysts suggested investors consider the quickly "evolving industry" as reason to emphasize market dominance over valuation arguments. Even so, AOL shares at sub-50 prices were undervalued by any metric, according to the note.
On Thursday, AOL shares closed up 1 11/16 at 60.
