UPDATE: Morgan Stanley Reiterates Underweight Rating, Raises PT on AMC Networks

In a report published Friday, Morgan Stanley reiterated its Underweight rating on AMC Networks (NASDAQ: AMCX), and slightly raised its price target from $42.00 to $43.00.Morgan Stanley noted, “We rate AMCX as a relative UW as we see other strong fundamental stories in media at lower valuations with less near-term risk. We are raising our PT primarily on higher digital revenues, but lowering our bear case as we raise our estimated impact of a permanent DISH loss to $15-20/share. AMCX has a wider risk/reward spread vs. peers given significant potential upside from a VOOM litigation win (trial begins on Sept 18th and will likely last 4-6 weeks) and downside if the DISH distribution loss is permanent. Our base case assumes DISH distribution renews in '13 at market rates, but AMCX sees no benefit from a win in its pending litigation. Applying a '13 EBITDA multiple of 9.5x for AMCX's operating assets (between DISCA and SNI) and a $1B VOOM settlement ($300M after-tax to AMCX), we estimate market is pricing in a ~20% probability the lost DISH distribution is permanent.”AMC Networks closed on Thursday at $40.62.