Cablevision (CVC) fell hard on Friday after the company announced that Chief Operating Officer Tom Rutledge will be leaving the company. The announcement helped send shares down 7.2% on Friday. The Wall Street Journal reported today that Rutledge left because of disagreements with CEO James Dolan, citing an anonymous source.
But today shares are rising 2.8% in midday trading as sentiment appears to be turning more positive for the company.
“While understandable, we think the market’s reaction is a touch extreme. We see compelling value in Cablevision’s shares at these levels,” wrote Citi analyst Jason Bazinet in adding Cablevision to Citi’s “Top Picks Live.”
In addition, some observers think Cablevision could be in a good position to be taken over. Cablevision’s free cash flow should remain healthy, and investors can enjoy a strong dividend as they find out what the company plans to do next, Bazinet argues.
“Cablevision uses about 25-30% of its FCF for dividends. At the valuation, shareholders are paid a 4.7% dividend to wait for Cablevision’s next move.”
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