Market Overview

AMC Networks Wins A New Bull

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AMC Networks Wins A New Bull

AMC Networks Inc (NASDAQ: AMCX)’s got a lot going for it.

It has high-demand content, no exposure to NFL ratings and what Wells Fargo calls a “clean,” five-network portfolio. It has an expanding share of ad dollars, high subscription figures and widening distribution. It has strong management, a roomy balance sheet and the capacity to merge or buy.

“We think AMCX possesses every aspect that will help it navigate the uncertain media waters successfully,” Wells Fargo analyst Marci Ryvicker wrote in a Tuesday note.

Ryvicker initiated coverage on the stock with an Outperform rating and $72 price target.

No Competition

The analyst considers AMC’s diversified portfolio, including “Better Call Saul” and “Into The Badlands,” and franchise value for “The Walking Dead” largely underrated. And even if ratings are down on popular segments, loyal fan bases remain attractive to advertisers.

“There is still no other place (outside of sports) for advertisers to capture so many 18 to 49 eyeballs — especially when most of AMCX’s competitors (i.e. HBO, Showtime and Netflix) don’t have an ad-based model,” Ryvicker wrote, calling the firm “broadcast on steroids.”

At the same time, the firm is relatively competitive in quality-to-valuation ratios. AMC trades at a discount to CBS Corporation (NYSE: CBS) considering price-to-earnings and in-line with rivals Viacom, Inc. (NASDAQ: VIAB) and Discovery Communications Inc. (NASDAQ: DISCA) considering enterprise value-to-earnings before interest, taxes, depreciation and amortization.

“We don’t think this is reasonable,” Ryvicker wrote.

The Bottom Line

Wells Fargo estimated 2017 earnings per share of $6.52, just above consensus. Risks to the thesis include accelerated cord-cutting, viewership loss and economic downturns.

At time of publication, shares were set to open at $57.77.

Related Links:

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Needham: CBS Is Building The Next Netflix

Latest Ratings for AMCX

DateFirmActionFromTo
Nov 2019MaintainsHold
Nov 2019MaintainsUnderperform
Oct 2019DowngradesBuyNeutral

View More Analyst Ratings for AMCX
View the Latest Analyst Ratings

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