TV Network Stocks May Have Uneventful Q1 Earnings Season

Within the next couple of weeks, the majority of TV network stocks will be reporting first-quarter earnings. Earnings season is always important for investors, but KeyBanc analyst Andy Hargreaves is expecting this earnings season to be relatively uneventful for most major TV network stocks.

In a note on Tuesday, Hargreaves gives his take on the major players and what investors can expect when they report.

“Reduced valuations, stabilizing pay-TV subscribers, the prospect of further consolidation, and weak near-term prospects for several online ad-supported video services have improved the risk/reward around network stocks, in our view,” Hargreaves said.

Here’s an overview of what KeyBanc expects this earnings season:

• AMC Networks Inc AMCX reports on May 10 before the market open. Hargreaves is more bearish about AMC than any other TV network stock at the moment and said secular challenges have put future estimates at risk. KeyBanc has a Sector Weight rating and $50 price target for the stock and is expecting an in-line Q1 report.
• CBS Corporation CBS reports on May 3 after the market close. Hargreaves said CBS is one of the stocks in the space he is most bullish about at the moment and said the company is well-positioned to hang onto its spot in the large majority of pay-TV bundles. KeyBanc has a Sector Weight rating and $56 price target for the stock and is expecting a Q1 earnings beat.
• Discovery Communications Inc. DISCA reports on May 8 before the market open. In addition to CBS, Hargreaves is most bullish on Discovery and said the company’s historically low valuation and synergy opportunities following the Scripps acquisition put the company in a strong position. KeyBanc has a Sector Weight rating and $26 price target for the stock and is expecting a Q1 earnings beat.
• Twenty-First Century Fox FOXA has yet to announce its report date. Hargreaves said the Walt Disney Co DIS buyout offers an attractive monetization opportunity, and the remaining Fox business will be anchored by Fox News and the Fox Network. KeyBanc has a Sector Weight rating and $37 price target and is expecting an in-line Q1 report.
• Time Warner Inc TWX reports on Thursday before the market open. Hargreaves said the AT&T Inc. T buyout will likely be approved, but the company could face long-term margin pressures if it does not. KeyBanc has a Sector Weight rating and $97 price target and is expecting an in-line Q1 report.
• Viacom, Inc. VIAB on Wednesday reported a top- and bottom-line beat. Hargreaves said Viacom’s assets have strategic value, but the company is battling against a secular decline in linear TV. KeyBanc has a Sector Weight rating and $35 price target.

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