Macquarie Ups Scripp (SNI) PT on Earnings Beat

Macquarie analyst, Amy Yong, raised her price target on Scripps (NYSE: SNI) to account for earnings upside in the quarter. The new target is $61, up from $55. No change to Neutral rating.

Scripps' 70/30 ad/affiliate mix as well as ratings improvements resulted in encouraging 5%+ ad growth. Its lifestyle franchise has a loyal demo where 90%+ viewership is live. HGTV was the number one cable network for women 25-54, the best single ratings achievement the network has seen, while Food Network ratings hit a positive inflection point.

Growth is expected to accelerate sequentially given additional programming spend and a traditionally strong holiday season; our ad growth goes to 4.4% for 4Q and we see EBITDA margins roughly similar to 3Q at 37%.

Mgmt expects to see ratings improvement from 4Q for the Travel Channel as it invests in new programming, but the turnaround will likely take some time.

Roughly 20-25% comes up this year with the remainder in ’16/’17. We expect affiliate rates will increase by mid-single digits with Sling TV, Netflix, and more driving it a bit closer to 7%.

The integration of Polish TVN is progressing well with it currently holding the largest share in Poland at 22%; successful programming could grow its dominance even more. Scripps’ international launches have included HGTV in Malaysia, Food Network in the Czech Republic and an upcoming over-the-air Food Network in Australia.

For an analyst ratings summary and ratings history on Scripps Networks Interactive click here. For more ratings news on Scripps Networks Interactive click here.

Shares of Scripps Networks Interactive closed at $57.89 yesterday.

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