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Media stocks as a whole have lost almost 10 percent in the past few days. Anthony DiClemente, Nomura senior analyst, was on CNBC Friday to reveal the criteria that these stocks must fulfill for an investor to buy them and to discuss what kind of stocks to avoid.
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"3 things that you consider, when you think about whether to buy these media stocks on the selloff. They have to have three characteristics in my opinion," DiClemente began. "One is, they have the scale. Two is, they have to offer lot of sports. And three is, they have got to have the ability to go direct to consumers."
He continued, "So, the way HBO, CBS, perhaps at some point ESPN can go direct. If you are O for 3 on those then, I think, you become a bit in the un-investible category. If you are 3 for 3 on those, then let's talk about valuation and let's talk about the multiple and has your stock reached a value multiple."
Market Can Be Overreacting
DiClemente revealed that Nomura for a long time has been cautious on "pure cable TV providers" like Viacom, Inc. (NASDAQ: VIAB) and Discovery Communications Inc. (NASDAQ: DISCA).
He explained how media stocks are overreacting to subscriber loss, saying, "Now if you took media as an industry, we have done an analysis that would suggest that even if the group lost 5 million subscribers. Remember, Disney didn't talked about that, Disney's change was very minute. But if you lost 5 millions, the average earnings hit would be about 6 percent."
"Now for the guys I just mentioned, it would be more than that because they are more exposed to cable TVs, but for some of these stocks that are down and the group down close to 10 percent...those could be overreactions," DiClemente said.
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.