Time Warner Cable Passes $90 With Fatter Margins On Pay-TV Biz

Time Warner Cable's stock has come a long way since 2010, and is currently tradingaround $78. Is there furthermore room to grow? All the same, provided thecompany can maintain its growth in broadband and make somesignificant improvements in its pay-TV and digital phonebusinesses. Below we discuss certain key drivers that can lift ourprice estimate for Time Warner Cable past $90.

Although Time Warner Cable has gained subscribers in VoIP (Voice over Internet Protocol), it has not kept up with the industry growth, thusleading to a fall in market share. This is another area ofimprovement where the company can do better with pricing andbundling and thereby increase its value. If the company can sustainits current market share over our forecast period, it can addanother $3 to our current price estimate.