UPDATE: Stifel Nicolaus Sees Possibility of Bidding War for Alltel (AT)

UPDATE: Stifel Nicolaus comments on the WSJ story suggesting private equity firms are beginning to circle Alltel (NYSE: AT). The firm notes that a buyout has been a key part of their thesis since the spin-off of the company's wireline assets earlier this year. The firm says the company is a very attractive acquisition target for either private equity, or a strategic player such as Verizon Wireless (NYSE: VZ) (NYSE: VOD) or Sprint Nextel (NYSE: S).

The firm said a possibility exists of a potential bidding war between interested parties and believes valuations could climb to as high as $85/share in a competitive bidding environment.

The firm maintains its Buy rating and $68 price target and said the stock remains its top US-based stock.

Merrill Lynch's Cohen Comments on Media Consolidation

According to The New York Times Deal Book blog, citing a Reuters article, Merrill Lynch analyst Jessica Reif Cohen sees further consolidation in the media sector. Link

Cohen said Comcast (Nasdaq: CMCSA) and Time Warner Cable (NYSE: TWX) will continue to dominate in the cable market.

Cohen said Verizon (NYSE: VZ) or AT&T (NYSE: T) could buy satellite-TV providers EchoStar (Nasdaq: DISH) or DirectTV (NYSE: DTV), or the two could merge.

Cohen said DreamWorks Animation (NYSE: DWA) is a possible takeover target.

Cohen sees Viacom (NYSE: VIA) and CBS (NYSE: CBS), which split in January, as possible acquirers. She doesn't think either will be taken private as has been rumored.