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AMC Networks' 'Fears Realized,' Morgan Stanley Downgrades

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AMC Networks' 'Fears Realized,' Morgan Stanley Downgrades

Shares of AMC Networks Inc (NASDAQ: AMCX) traded down about 1.9 percent on Wednesday after Morgan Stanley downgraded its rating on the stock from Overweight to Equal Weight, trimming its price target from $78.00 to $65.00.

Analysts led by Ryan Fiftal and Benjamin Swinburne argued they have become less optimistic about the company’s potential to consistently grow EBITDA beyond 2016 given the lower-than-expected ratings of new show launches and the declining "Walking Dead" ratings, which have put pressure on the top line.

Related Link: A 'Walking Dead' Theme Park Attraction Will Be Here Soon

A Look Into Ratings

AMC’s 2015 hit show "Fear the Walking Dead" saw its ratings tumble by roughly 40 percent in 2016. In addition, the three major shows launched this year — "Night Manager," "Preacher" and "Feed the Beast" — posted, on average, ratings 50 percent below Morgan Stanley analysts’ expectations. These poor figures make evident that replacing "The Walking Dead" will be really challenging.

“Without successful new shows to assuage investor concern about Walking Dead audience and (eventual) revenue declines, we no longer expect AMCX to re-rate toward cable network peers over the next year,” the report concluded.

AMC Networks closed Wednesday's regular trading session down 1.91 percent at $58.49.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

Latest Ratings for AMCX

DateFirmActionFromTo
Nov 2020Morgan StanleyMaintainsEqual-Weight
Oct 2020JP MorganDowngradesNeutralUnderweight
Jul 2020Goldman SachsInitiates Coverage OnSell

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