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AMC Networks Downgraded By Topeka: Here's Why

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In a report published Tuesday, Topeka Capital analyst David W. Miller downgraded the rating on AMC Networks Inc (NASDAQ: AMCX) from Buy to Hold, with an $85 price target. The stock has risen 28.6 percent in 2015 alone, reflecting a drastic shift in sentiment towards it.

"In many ways, 2015 thus far is the year that 2014 should have been, but wasn't, due to certain exogenous events that would have been very tough to predict at the beginning of 2014, but which clearly lent an "unloved" flavor to the stock," Miller stated.

In 2014, the stock was pressured by certain fund redemptions in April and May, along with EBIT and EPS miss in 2Q14, driven by higher program amortization. In addition, the spin-off series of "Breaking Bad," "Better Call Saul," was shifted from 3Q14 to 1Q15. The company was already facing tough comps, given that the final season of "Breaking Bad" aired in 3Q13.

The analyst expects the company to deliver double-digit revenue, EBITDA and EPS growth in H2, the most rapid growth rate in 2H2015 among AMC Networks' media peers. However, if "Humans" and "Badlands" fail to succeed, there could be downside risk to the stock. On the other hand, if they do better than "Walking Dead," there could be upside to the estimates.

According to the Topeka Capital report, "(While) AMCX would make a wonderful acquisition for any one of the six bellwether large-cap Media names, interest in acquiring the whole enterprise seems to be tepid. More specially, if core mothership AMC - just AMC - were put up for sale, then interest would be higher, but interest in AMCX's other linear networks, those being IFC, WE and Sundance, seems tepid at this time."

Latest Ratings for AMCX

Jul 2018Imperial CapitalInitiates Coverage OnIn-Line
Jun 2018Goldman SachsDowngradesBuyNeutral
Jun 2018BernsteinDowngradesMarket PerformUnderperform

View More Analyst Ratings for AMCX
View the Latest Analyst Ratings

Posted-In: David Miller Topeka Capital Markets VetrAnalyst Color Downgrades Analyst Ratings


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