Nomura Bullish On AMC Networks And Its Content, Recommends Calling The Stock

In an equity research report published Thursday morning, Nomura analyst Anthony DiClemente upgraded the stock of AMC Networks Inc. AMCX from Neutral to Buy, raising his price target from $70 to $80.

AMC’s shares currently trades around $65.30, after gaining about 1.35 percent on Thursday morning. Given the potential upside, the research firm recommended calling the stock.

According to the report, Nomura analysts think that “the genre of content that AMC Networks licenses or owns comports well to future trends in media consumer behavior.” Moreover, they expect its strong content lineup for 2015 to drive faster (compared to peers) revenue and earnings growth. They estimate EPS from $3.51 to $3.48 for FY2014, and EPS from $4.55 to $4.58 for FY2015.

DiClemente cited five main reasons for the upgrade:

1) AMCX has lined up a strong content cycle visibility for 2015.

2) Margin stability is certainly possible.

3) AMCX is less vulnerable to being dropped by MVPDs.

4) AMCX is a possible candidate for consolidation.

5) Valuation is attractive; and capital returns are eventually possible.