An unlikely winner during correction: Cablevision

Published Thu, Sep 3 201511:27 AM EDTUpdated Thu, Sep 3 201511:56 AM EDT

Cablevision rallied 5 percent for the week through Wednesday as Wall Street speculates the company is an acquisition target. The cable television provider is one of the best-performing stocks this year, up 28 percent compared to the S & P 500 down 5 percent. Even during one of the worst breadth days in years, Cablevision was one of only three stocks to close up in the benchmark Tuesday. CNBC Pro reached out to Wall Street analysts and here is what they said… 1) The acquisition potential is real: When reached for comment eight analysts said takeover speculation was the primary reason for Cablevision's recent equity strength, with all of them citing Altice by name. In a mid-July interview, the founder and head of European telecom company Altice, Patrick Drahi, was quoted in The Wall Street Journal saying he would be interested in acquiring Cox and Cablevision. Not only are they talking about it, some traders are putting money at risk on the potential for a buyout. Jon Najarian's optionMONSTER Heat Seeker program detected a purchase of 15,000 September 27 calls midday Tuesday for 85 cents. The buyer of these options would only make money if shares of Cablevision rallied significantly more than $28 in the next few weeks. The stock closed Wednesday at $26.36. Read More Following huge beat, buy Best Buy? An analyst for FBN Securities doesn't see Altice as the only prospective buyer. There's "always the chance the Dolans try to take CVC private as they have tried to do this a few times before and in some SEC filings say there is no guarantee they won't try again," wrote Robert Routh of FBN. 2) Business operations are improving: Cablevision's second-quarter earnings were widely applauded by the Street and many signaled it as an an important turning point. Every customer metric across all business segments of video, phone and data beat estimates. "Financial and operating results at CVC this year have shown material improvement over prior years. In fact, according to the second-quarter earnings release CVC had the largest quarterly gains in both customer relationships and high-speed data in more than two years and the lowest churn rate in six years," Routh said in an email. 3) Cord-cutting threat smaller than expected James Dolan, Cablevision's chief executive officer, downplayed how quickly consumers will shift from cable to Internet-based over-the-top services. "My own prediction is that will be at least five years for 10 percent of the market to move and 10 years for 30 percent of the market to move," he said on the company's last earnings call. Dolan admitted the cord cutting is real, however he played up the prospects and future profit potential of data customers. "Video customers actually are not the most valuable customers. By far data customers are the most valuable," Dolan said on the call. "(Data) continues to grow exponentially. The outlook for data is very strong." Read More Top analyst: 4 reasons to buy Twitter right now Analysts also explicitly called out the lower competitive threat from Verizon 's FIOS bundle. "We note Verizon was not as aggressive in second quarter as a result of programmers' concerns over the company's new custom bundles," wrote Canaccord Genuity's Gregory Miller in a note to clients. Pressure from Verizon's FIOS service is mostly behind them according to a buy-side analyst. To be sure, a takeover is not a done deal in the eyes of the analysts. Most are still holding off raising their Cablevision stock price targets to account for a takeover premium until more signs of progress on a merger. The stock is trading 14 percent above the average 12-month target price of $23.18 from Wall Street, according to FactSet. But with so much smoke about a potential acquisition and the pervasive negativity toward the company, if the operations of the business continue to improve Cablevision may very well continue to climb the wall of worry and infuriate the skeptics. Altice spokesman Arthur Dreyfuss declined to comment on Cablevision acquisition speculation. "It's Cablevision's longstanding policy not to comment on rumors and speculation in the media," said Charles Schueler, executive vice president of communications at Cablevision. —CNBC's Gina Francolla contributed to this story.

Cablevision headquarters is shown in Bethpage, N.Y.

Jin Lee | Bloomberg | Getty Images

Cablevision rallied 5 percent for the week through Wednesday as Wall Street speculates the company is an acquisition target.

The cable television provider is one of the best-performing stocks this year, up 28 percent compared to the S&P 500 down 5 percent. Even during one of the worst breadth days in years, Cablevision was one of only three stocks to close up in the benchmark Tuesday.

CNBC Pro reached out to Wall Street analysts and here is what they said…

1) The acquisition potential is real:

When reached for comment eight analysts said takeover speculation was the primary reason for Cablevision's recent equity strength, with all of them citing Altice by name.