Mediacom Stock Soars On Analyst Upgrade

Greenfield Predicts MSO Will Beat Expectations

By Mike Farrell -- Multichannel News, 6/2/2008 9:34:00 AM

Mediacom Communications stock rose more than $1 per share in early trading Monday after Pali Research media analyst Richard Greenfield slapped a “buy” rating on the stock, adding that he believes the small-market MSO will exceed its earnings expectations for the year.

Mediacom stock traded as high as $7.72 each on Monday (up $1.51 each or 24%), before settling back to $6.80 per share (up 59 cents or 9.5%) later in the morning.

In a research note Monday, Greenfield raised his rating on the stock from “neutral” to “buy,” with an $8.50 per share one-year price target on the stock.

In his note, Greenfield wrote that the stock has appreciated about 35% in the past five months, when he upgraded the stock from “sell” to “neutral.” While Greenfield noted that his investment thesis on Mediacom for the past 18 months has generally been “sell” because of aggressive competition and difficult retransmission consent/programming battles, he said several factors caused him to change his mind.

Greenfield was encouraged by the success of the triple play in the first quarter for the company—Mediacom was able to add basic customers for the first time since 2005 in the first quarter—and that the competitive threat doesn’t seem to be as severe as once thought.

“Throughout 2007, [Mediacom] was aggressively attacked by satellite competitors who utilized the Sinclair Broadcasting and Big Ten Network programming battles to increase their marketing spend in [Mediacom] markets,” Greenfield wrote. “While the Big Ten battle still looms, we believe the pressure on [Mediacom] has subsided for now.”