Seaport Research says “content” stocks have “possibly seen the worst of investors’ fears”
Comcast (CMCSA) is scheduled to announce quarterly results on October 26, while Paramount (PARA) and Warner Bros. Discovery (WBD) are expected to report earnings on November 2 and 8, respectively. What to watch for:
TARGET CUT AHEAD OF EARNINGS:
UBS lowered the firm’s price target on Warner Bros. Discovery, while keeping a Neutral rating on the shares ahead of the Q3 report. Total revenues should grow 4% year-over-year in Q3, while EBITDA increases 18% year-over-year to $2.86B, the firm tells investors in a research note. While there is a potential for an earlier resolution for the ongoing actors’ strike, UBS would expect an initial ramp up period for production and associated revenues.
Click here to check out Warner Bros. Discover’s recent Media Buzz Sentiment as measured by TipRanks.
DRIVERS COULD CHANGE IN COMING QUARTERS:
Barclays lowered the firm’s price target on Paramount ahead of the Q3 report. The firm says cable valuations benefited from the bottoming of broadband subscribers earlier in the year but that these drivers could change in the coming quarters. Telecom valuations are at multi-year lows in contrast, despite a more rational pricing environment, Barclays told investors in a research note. Barclays also lowered the firm’s price target on Warner Bros. Discovery but kept an Equal Weight rating on the shares ahead of the Q3 report.
COMPELLING RISK-REWARD:
Earlier this month, Seaport Research initiated coverage of Comcast, Warner Bros. Discovery and Paramount. The firm started coverage of the “core” Media industry names, or those with owned IP, studios and/or streaming services, arguing that these “content” stocks have “possibly seen the worst of investors’ fears.” The firm, which added that the group “may see some consolidation among the players,” is broadly positive given its view that the group is at historically low valuations, has been under significant pressure for some time, and the current risk-off market environment “can provide compelling risk-reward opportunities.”
DECLINE IN LINEAR, TRANSITION TO DTC:
Bernstein initiated coverage of Comcast and Warner Bros. Discovery. The decline of linear and transition to direct-to-consumer are “well-established narratives” and future growth and profitability will be about outpacing linear decline with DTC growth and having scale for profitability, the firm tells investors. More bearish on Paramount, Bernstein started coverage of the name.
—
Originally Posted October 25, 2023 – Here’s what Wall St. experts are saying about these media names ahead of results
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from The Fly and is being posted with its permission. The views expressed in this material are solely those of the author and/or The Fly and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Join The Conversation
If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.