Markets & Finance

Morgan Stanley Ups AOL to 'Overweight'


Morgan Stanley upgraded AOL Time Warner (AOL) to overweight from equal-weight.

Analyst Richard Bilotti says the balance sheet risk is reduced by the number of asset sale alternatives and internally generated free-cash flow. He notes AOL's potential for negative earnings per share revisions in 2003 is now reduced.

Bilotti says AOL's valuation, using sum-of-the-parts discounted, consolidated price/free-cash flow methodologies, points to a $17 intrinsic value, which is his price target. He sees 40 cents 2003 earnings per share, 52 cents for 2004, and 65 cents for 2005.


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