Tags: Gabelli | Fox | Time Warner | stock

Gabelli: Both Fox and Time Warner Stocks Will Ultimately Soar

By    |   Thursday, 07 August 2014 11:17 AM

While the shares of Time Warner fell after 21st Century Fox announced it was dropping its bid for the company Tuesday, both stocks have a bright future, says Mario Gabelli, CEO of Gamco Investors, which holds shares of each company.

Fox stock already has increased 6.6 percent since Tuesday's close amid a strong quarterly earnings report, closing at $33.08 Thursday. Time Warner hasn't fared as well, closing at $72.06 Thursday, down 15 percent from Tuesday's close.

But, "both these companies will do extraordinarily well over the next five years," Gabelli tells CNBC. "I think you'll see $130 [a share] in Time Warner in five years. You'll see a $65 stock in Fox in five years."

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Gabelli suggests that Fox's move to drop its bid might be a negotiating tactic.

Morningstar analyst Neil Macker views $37 as fair value for Fox stock now.

While dropping its bid for Time Warner "was surprising, we believe [Fox CEO] Rupert Murdoch could come back and rebid, especially if Fox's stock price rebounds and Time Warner's price either stagnates or declines," Macker writes on Morningstar.com.

As for Time Warner, he has a $78 fair value estimate for its stock.

"With the recent spinout of Time [magazines], Time Warner has completed its transformation into a pure-play entertainment content company," Macker writes. "We assign the company a wide economic moat as its entrenched cable networks and successful content studio create barriers to entry."

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While the shares of Time Warner fell after 21st Century Fox announced it was dropping its bid for the company Tuesday, both stocks have a bright future, says Mario Gabelli, CEO of Gamco Investors, which holds shares of each company.
Gabelli, Fox, Time Warner, stock
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2014-17-07
Thursday, 07 August 2014 11:17 AM
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