Jefferies Cut Estimates On Media And Entertainment

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Jefferies cut its estimates on Media and Entertainment in an industry note issued Friday.

Analysts led by John Janedis expressed concern that “a lack of incremental demand post Thanksgiving would negatively impact guidance / our estimates. It doesn't appear as though spending has picked up, which has led to limited or no pricing power likely compounded by an increase in sports programming hours, impacting male skewing nets.”

“We are tweaking our 4Q ad estimates lower for all of the media companies in our coverage universe. On average, we are taking a 120bps haircut to our cable ad forecast, now expecting 4Q ad growth of 1.1 percent vs. our prior 2.3 percent estimate. With 4Q cable net ad growth likely to be the lowest since 4Q09, an improvement in 1Q will be needed to support the stocks,” according to Janedis.

For CBS Corporation CBS the firm tweaked its “2015 revenue, OIBDA and EPS estimates to $13.7B, $3.43B, and $3.59 vs. our prior $13.8B, $3.53B and $3.73 (FC: $14.3B, $3.46B, $3.69). Our 1Q15 EPS is now $0.77 vs. our prior $0.87 (FC: $0.89).”

Time Warner Inc TWX network revenue and EBIT were adjusted to “$2.649B and $966M, respectively, vs. our prior $2.660B and $974M. Our 4Q revenue, EBIT and EPS is $7.61B, $1.64B and $1.01 (FC: $7.59B, $1.67B, $1.01).”

Twenty-First Century Fox Inc FOXA was lowered on its “F2Q15 revenue, EBITDA, and EPS estimates to $7.38B, $1.77B, and $0.43 vs. previous $7.40B, $1.79B, and $0.44 (Street estimates: $7.37B, $1.72B, $0.43). With C+3 ratings down 23 percent QTD at the network we took TV EBITDA to $255M from $275M as FOXA has cancelled four of its five new shows for the 2014-15 season.”

For Walt Disney Co DIS the firm lowered its “F1Q (Dec.) EPS by $0.01 to $1.07 (FC: $1.06). Our F1Q revenue and EBIT are $12.87B and $2.92B vs. First Call estimates of $12.86B and $3.01B. For F2015 and beyond, we also lowered our broadcast network ad growth assumption by 100bps to 2 percent. Our F15 revenue, EBIT and EPS estimates are $52.2B, $13.0B and $4.68 vs. our prior $52.2B, $13.0B and $4.69 (FC: $51.7B, $13.5B, $4.66).”

The firm lowered Viacom, Inc.'s VIA “F1Q15 domestic ad estimate by 200bps to -7 percent from -5 percent. Our new revenue, EBIT, and EPS estimates are $3.40B, $949M, and $1.29 vs. previous $3.42B, $964M, and $1.31 (Street estimates: $3.45B, $983M, $1.33). Our estimates include Channel 5 which we expect to contribute $153M and $15M to revenue and EBIT, respectively.”

For Discovery Communications Inc. DISCA the firm adjusted its “longer term outlook for U.S. cable network advertising to 3 percent from our prior 4 percent estimate, as well as assuming a greater F/X headwind in 2015. Net-net, we are lowering our 2015 revenue, OIBDA and EPS to $6.98B, $2.67B, and $1.92 (FC: $6.97B, $2.75B, $2.12) vs. our prior $7.07B, $2.73B and $1.97.”

The firm expected Scripps Networks Interactive, Inc. SNI F4Q14 revenue, EBITDA, and EPS to come in at $679M, $289M, and $0.95 versus the prior expectations of $684M, $292M, and $0.97.  Street estimates were $686M, $296M, $1.00.

All the firms were rated Buy except for Discovery Communications and Scripps Networks Interactive which were each rated Hold.

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Posted In: Analyst ColorAnalyst RatingsJefferiesJohn Janedis
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