UBS Cuts Price Target on AMC Networks (AMCX) to $48; Reiterates Sell
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UBS reiterated a Sell rating on AMC Networks (NASDAQ: AMCX), and cut the price target to $48.00 (from $57.00). Concern remain for earnings expectations for 2018 and beyond as it is expected that TWD will soon start to decline. UBS believes that it will likely be too difficult for AMCX to launch enough new hits in this fragmented media landscape to offset the decline in the profitability.
Analyst Doug Mitchelson commented, "AMCX shares rebounded post-3Q as optimism regarding a round of new originals in 2017 kicked in, along with hopes that M&A prospects might improve under a Republican administration and that 3Q16 might have reset expectations, not to mention The Walking Dead ("TWD") having a stronger-than-expected start to Season 7. Our concern remains 2018 and beyond earnings expectations as we expect that TWD will soon restart its inevitable decline and believe it will likely be too difficult for AMCX to launch enough new hits in this fragmented media landscape to offset the decline in the profitability of TV's #1 scripted show. Further, we continue to expect early 2017 V-MVPD new skinny bundle launches are unlikely to include AMCX, which could hamper affiliate revenue prospects and reach. While some investors highlight the horizontal synergy potential for AMCX, we do not see any current desire by the major media companies to delve deeper into linear traditional entertainment network shelf space; we continue to value AMCX on a stand-alone basis."
Shares of AMC Networks closed at $53.63 yesterday.
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