Trefis members have created forecasts for two key drivers of Time Warner Cable’s (NYSE:TWC) stock over the last week: (1) Fee per Digital Phone Subscriber and (2) Digital Phone Gross Profit Margin. These forecasts suggest that Fee per Digital Phone Subscriber and as well as Digital Phone Gross Profit Margin will trend below the estimates of the in-house team of analysts at Trefis. These projections indicate a combined downside of 5% for the TWC stock.
Time Warner Cable digital phone (or VoIP) service competes with services offered by telecom operators AT&T (NYSE:T) and Verizon (NYSE:VZ), and cable operator Comcast (NASDAQ:CMCSA). We currently have a Trefis price estimate of around $48 for Time Warner Cable’s stock, about 11% below the current market price of close to $55.
We estimate Digital Phone accounts for 12% of Trefis estimate for TWC’s stock. Time Warner Cable’s stock is quite sensitive to (1) Fee per Digital Phone Subscriber and (2) Digital Phone Gross Profit Margin. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.
1. Fee per Digital Phone Subscriber
The average of Trefis member forecasts for Fee per Digital Phone Subscriber indicate a decrease from around $38 per month in 2010 to close to $36 per month by 2016, compared to the baseline Trefis estimate of a decrease from $38.50 per month in 2010 to around $37 per month by the end of the Trefis forecast period. The member estimates imply a downside of 1% to the Trefis price estimate for the TWC stock. In the past, Fee per Digital Phone Subscriber has decreased from $42 per month in 2003 to around $39 per month in 2009.
Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Time Warner Cable’s stock to Fee per Digital Phone Subscriber.
Our complete analysis for Fee per Digital Phone Subscriber is here.
2. Digital Phone Gross Profit Margin
The average of Trefis member forecasts for Digital Phone Gross Profit Margin indicate margins remaining around 45% over the forecast period, compared to the flat baseline Trefis estimate of 48.5% over the Trefis forecast period. The member estimates imply a downside of 4% to the Trefis price estimate for Time Warner Cable’s stock. In the past, Digital Phone Gross Profit Margin increased from 32% in 2003 to around 47% in 2009.
Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Time Warner Cable’s stock to Digital Phone Gross Profit Margin.
Our complete analysis for Time Warner Cable’s stock is here.
