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AMC Networks Inc (NASDAQ:AMCX)’s got a lot going for it.
It has high-demand content, no exposure to NFL ratings and what Wells Fargo calls a “clean,” five-network portfolio. It has an expanding share of ad dollars, high subscription figures and widening distribution. It has strong management, a roomy balance sheet and the capacity to merge or buy.
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“We think AMCX possesses every aspect that will help it navigate the uncertain media waters successfully,” Wells Fargo analyst Marci Ryvicker wrote in a Tuesday note.
Ryvicker initiated coverage on the stock with an Outperform rating and $72 price target.
No Competition
The analyst considers AMC’s diversified portfolio, including “Better Call Saul” and “Into The Badlands,” and franchise value for “The Walking Dead” largely underrated. And even if ratings are down on popular segments, loyal fan bases remain attractive to advertisers.
“There is still no other place (outside of sports) for advertisers to capture so many 18 to 49 eyeballs — especially when most of AMCX’s competitors (i.e. HBO, Showtime and Netflix) don’t have an ad-based model,” Ryvicker wrote, calling the firm “broadcast on steroids.”
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At the same time, the firm is relatively competitive in quality-to-valuation ratios. AMC trades at a discount to CBS Corporation (NYSE:CBS) considering price-to-earnings and in-line with rivals Viacom, Inc. (NASDAQ:VIAB) and Discovery Communications Inc. (NASDAQ:DISCA) considering enterprise value-to-earnings before interest, taxes, depreciation and amortization.
“We don’t think this is reasonable,” Ryvicker wrote.
The Bottom Line
Wells Fargo estimated 2017 earnings per share of $6.52, just above consensus. Risks to the thesis include accelerated cord-cutting, viewership loss and economic downturns.
At time of publication, shares were set to open at $57.77.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.