Mediacom Communications Jumps While Cable Sector Slides

Pali Capital Analyst Rich Greenfield’s Upgrade Boosts Cable Operator’s Stock 15%

Shares of cable operators slid lower Wednesday in a weak start to the new year, but one stock was able to buck the trend: Mediacom Communications rose close to 15% on the back of an analyst upgrade.

Pali Capital analyst Rich Greenfield upgraded Mediacom to “neutral” from “sell” Wednesday, noting that its stock price fell 35% since Pali’s downgrade Oct. 15 and was 17% below what the previous target price was at $5.50 per share.

While Greenfield believes the company will still be dealing with a churn issue because of its stalemate with the Big Ten Network, the worst damage may have already been done. The analyst also said the “impact of greater satellite competition and, in turn, lower 2008 revenues, EBITDA [earnings before interest, taxes, debt and amortization] and free-cash-flow estimates is more appropriately discounted in the stock at these levels.”

Mediacom stock rose $0.68 per share on the day to close at its highest level since Nov. 5 at $5.27, while others in the sector fell in lockstep with the broader market.

Industry bellwether Comcast fell $0.56, or 3%, to $17.70; Cablevision Systems slid $0.44, or 1.8%, to $24.06; Charter Communications was off $0.03, or 2.5%, to $1.14; Time Warner Cable dropped $0.13, or less than 1%, to $27.47; and RCN slipped $0.50, or 3.2%, to $15.09.

The cable sector has been under pressure in recent months for a host of reasons, including the specter of regulation, increased competition from satellite and telephone companies and the housing debacle.