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WEST HARTFORD — Shares of General Electric Co. rose Tuesday as an analyst raised his price target Tuesday for the industrial and financial conglomerate on improved margins for its NBC-Universal television property.
Steven E. Winoker of Bernstein Research said in a note to clients he believes the enterprise value for NBC-Universal is between $21 billion and $23 billion, based on a comparison with other media companies such as News Corp., Time Warner Inc. and Walt Disney Co.
An improved view of NBC-Universal's margins in late 2010 and beyond prompted Winoker to increase his 2010 earnings estimate to 95 cents per share from 94 cents per share. And he raised his 2011 earnings estimate to $1.29 per share from $1.27 and his per-share estimate for 2012 to $1.53 from $1.50.
The changes in his estimates for 2011 and 2012 prompted Winoker to raise his price target to $17 from $16.
"NBCU's valuation reflects its skew towards high quality cable assets offset by poor to mediocre positioning and performance in its other businesses," he said.
GE, based in Fairfield, Conn., reported in its second quarter that profit at NBC dropped 41 percent, which followed a 45 percent decline in the first quarter.
Winoker said most of the "collapse" this year in operating profit was due to declines at the film business, "due to a disappointing film slate," and a fall on the broadcast side "due to massive declines" in local TV advertising and ratings declines at the NBC network.
"Longer-term, NBCU's cable networks appear strategically well-positioned for growth driven by the secular shift in ratings and advertising away from the broadcast networks," he said.
NBC's broadcast TV business will remain under pressure because of ratings troubles, but could show growth if ratings recover, he said.
And in the film segment, a recovery must be driven by better-performing films, though a recovery will be partially offset by challenges in home video, which accounts for much of studio profits, Winoker said.
"In general, the advertising markets are starting to slowly improve, but growth still remains down year-on-year," he said.
Shares rose 56 cents, or 3.7 percent, to $15.91 in afternoon trading.
