Salomon Smith Barney analyst Niraj Gupta reduced his 12-month price target on
Cablevision Systems Corp. Tuesday but stressed that investor concerns that the
company may initiate a convertible stock offering to meet 2003 funding
requirements are overblown.
Cablevision stock hit a four-year low Monday as rumors circulated that the
company would add to its already considerable leverage by issuing a convertible
debt offering to cover an expected $400 million to $500 million funding
shortfall in 2003.
The MSO's stock fell $2.15 per share May 13, or nearly 10 percent, to $20.25
-- its lowest point since February 1998.
In a report, Gupta said it is unlikely that Cablevision would issue more
debt. Instead, he predicted, the company would sell assets -- notably its
personal-communications-services wireless-spectrum licenses -- to raise money.
Gupta estimated that the PCS licenses are worth more than $1 billion.
Earlier this month, Cablevision said it would focus on funding the 2003
shortfall, either by issuing debt or equity securities, reducing capital
expenditures, or selling assets.
Nevertheless, Gupta reduced his 12-month price target on the stock to $26 per
share from $55 due to Cablevision's weak competitive position relative to
direct-broadcast satellite, the continued poor performance of its noncable
assets (The Wiz and Madison Square Garden) and, to a lesser degree, the
uncertainty surround the 2003 funding gap. Gupta maintained his 'buy' rating on
Cablevision shares were up 5 cents each to $20.30 in early trading