Telecoms firm TalkTalk (LON:TALK) has made larger cost savings than expected, says Morgan Stanley, which raises its target price as a result.
The broker says these savings more than offset the investment in the launch of YouView, the company’s internet TV service.
Morgan Stanley had originally anticipated that funding the set-top boxes would see earnings dwindle near-term.
The broker has nudged up its target price by 20 pence to 190 pence.
It remains ‘equal-weight’ however as it still has concerns longer-term over how the company manages its transition to fibre broadband and “how much terminal value to attribute to a discount unbundler in UK broadband”.
The US banking firm also reckons there is potential value for the X-Factor sponsor in licensing Wi-Fi to mobile.
Shares soared yesterday after the company reported it doubled annual profits for the year.
The former Carphone Warehouse subsidiary also announced plans to launch a mobile phone handset later this year, while it added YouView is on track to hit homes this summer despite several delays so far.
Shares dipped 3 pence in early trading to 156 pence.