Market Overview

Media Stocks Showing 'Stress,' But Andy Hargreaves Is Positive On These Three Stocks

Share:
Media Stocks Showing 'Stress,' But Andy Hargreaves Is Positive On These Three Stocks
Related NFLX
Netflix Scores Big Investing In Building Its International Audience
Mid-Afternoon Market Update: Dow Slides Over 100 Points; CSX Shares Spike Higher
Netflix's (NFLX) CEO Reed Hastings on Q4 2016 Results - Earnings Call Transcript (Seeking Alpha)
Related AMCX
10 Most Popular TV Series In The U.S.: None Are Recent Award Winners
10 Most Pirated Shows Of 2016

  • Andy Hargreaves, a media analyst at Pacific Crest, said in a note that he has a positive near-term view of the TV networks.
  • Hargreaves noted that his "favorite longs" remain AMC Networks Inc (NASDAQ: AMCX), Twenty-First Century Fox Inc (NASDAQ: FOXA) and Netflix, Inc. (NASDAQ: NFLX).
  • Hargreaves cited favorable ad revenue distribution, sports assets and online streaming leadership to support his three long picks.
  • Any Hargreaves, a media analyst at Pacific Crest, commented in a note that he has a positive near-term view of the TV networks. Specifically, the analyst singled out AMC Networks, Twenty-First Century Fox and Netflix as being his "favorite longs."

    AMC To Benefit From Ad Revenue Skew

    Hargreaves continued that the distribution of ad revenue appears to be "skewing more heavily" to "top-performing content" and poses a threat to companies with "broader bases of good (but not great) content."

    Specifically, the analyst singled out this as a positive trend for AMC Networks, as "The Walking Dead" is "the biggest show on TV," "Better Call Saul" received "very good reviews" and "Fear The Walking Dead" received "the highest-rated first season ever."

    Related Link: Tiger Global Management Still Bullish On Netflix, Love Anheuser Busch

    Netflix Was ‘Right'

    Hargreaves also noted that while an ongoing theme of pushing direct distribution is "worthwhile," it merely acts as a sign that Netflix is "right," and it's already dominant position in the streaming, on-demand music segment is "likely to mute the impact" from competitors.

    At the same time, networks are attempting to mimic Netflix's model, and their efforts are expected to be margin dilutive due to the incremental costs to build and promote content.

    Twenty-First Century Fox's Sports Assets Attractive

    Finally, Hargreaves stated that Twenty-First Century Fox's sports assets should provide the company with "sustainable pricing power," that when coupled with an improved international profitability, should "drive solid profit growth."

    Rating And Price Targets

  • Shares of AMC remain Overweight with an unchanged $85 price target.
  • Shares of 21st Century Fox remain Overweight rated with an unchanged $35 price target.
  • Shares of Netflix remain Overweight rated with an unchanged $140 price target.
  • Image Credit: Public Domain

    Latest Ratings for NFLX

    DateFirmActionFromTo
    Jan 2017MacquarieUpgradesUnderperformNeutral
    Jan 2017Loop CapitalMaintainsBuyBuy
    Jan 2017MizuhoUpgradesNeutralBuy

    View More Analyst Ratings for NFLX
    View the Latest Analyst Ratings

    Posted-In: Andy Hargreaves Better Call SaulAnalyst Color Long Ideas Reiteration Top Stories Analyst Ratings Trading Ideas Best of Benzinga

     

    Related Articles (AMCX + FOXA)

    View Comments and Join the Discussion!