Market Overview

The Risk-Reward In AMC Networks Shares Could Be Highly In Investors' Favor

The Risk-Reward In AMC Networks Shares Could Be Highly In Investors' Favor
Related AMCX
Imperial Capital: Despite Stock Momentum In 2018, AMC Networks Isn't A Buy
Goldman Sachs Steps To The Sidelines On AMC Networks, Cites Declining Ratings For 'The Walking Dead'

FBN Securities views the risk-reward profile of AMC Networks Inc (NASDAQ: AMCX) as highly skewed in favor of investors, given the valuation of the shares of the company. The firm's fair value calculation of the shares is $66.24, representing a 32.2 percent upside.

Attractive Valuation

Robert Routh, an analyst at the firm, feels the valuation is low in light of the recent M&A moves in the TV content space. The analyst highlighted Lions Gate Entertainment Corp. (USA) (NYSE: LGF)'s pending $4.4 billion deal to merge with Starz (NASDAQ: STRZA) and the news thatAT&T Inc.(NYSE: T) is seeking to grow its portfolio of TV content through deals.

Related Link: Why "The Walking Dead" Bear Case For AMC Networks Is Dead Wrong

Thrust Toward Original Content

Even without a potential transaction, the firm noted that AMC Networks is materially undervalued. The firm also noted that the company is investing more in original programming rather than simply leasing programming, given the skyrocketing costs associated with the advent of OTT providers such as Netflix, Inc. (NASDAQ: NFLX) and, Inc. (NASDAQ: AMZN)'s Amazon Prime.

Smart Move Pays Off

This, according to the firm, has opened up opportunity for the company to distribute content on platforms apart from its domestic networks. The firm termed the move as smart, given the returns it has fetched in terms of higher ratings, affiliate fees, advertising revenue as well as public market value.

Dolan Family's Backing

The solid stable of cable networks and a decent library of owned content, according to the firm, gives scope for material upside in equity, even without a deal. While noting that the company is being run by the Dolan family, the firm said it believes that the family has proven they know how to create and highlight value for shareholders.

As such, FBN Securities has an Outperform rating on the shares of the company.

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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

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