The media sector is an “business in transition” and a number of other legacy media giants aren’t ideally positioned shifting ahead, in response to (BofA) Securities.
The Analyst: Jessica Reif Ehrlich downgraded the next media names:
ViacomCBS Inc (NASDAQ: VIAC) from Impartial to Underperform, price goal lifted from $30 to $32.
Discovery Communications Inc. (NASDAQ: DISCA) downgraded from Impartial to Underperform, price goal lowered from $32 to $25.
IHeartMedia Inc (NASDAQ: IHRT) downgraded from Impartial to Underperform, price goal lowered from $12 to $10.
Associated Hyperlink: Roku Surges To All-Time Excessive After HBO Max Deal, Stock Will get New Street-Excessive price Target
The Viacom Downgrade: The brand new bearish case for Viacom’s stock relies on:
- The resumption of scripted content material will negatively impression free cash move.
- Lack of readability on incremental advertising, tech, and content material spend associated to the 2021 Paramount+ rebrand.
- Viacom may be dropping the streaming video race as different main studios accelerated their streaming ambitions.
- Continued “overhang” from the Nationwide Soccer League.
- Delayed theatrical releases.
The Discovery Downgrade The case in opposition to Discovery’s stock relies on:
- Unclear indicators of how profitable Discovery+ shall be and what impression a streaming platform could have on linear TV viewership.
- Increased competitors provides stress to Discovery to create “must-have” content material.
- Competitors with substitute merchandise like YouTube.
- Lengthy-term streaming EBITDA margin estimates of round 20% are “considerably decrease” versus cable networks at greater than 40%.
The IHeart Downgrade: IHeart media boasts a “wholesome” liquidity place, manageable debt ranges, and potential advantages from Liberty Media will increase its stake as much as 50%, the analyst wrote. Nevertheless, buyers may need to keep away from the stock given:
- Low visibility on terrestrial radio promoting tendencies.
- An “elongated” restoration timeframe.
- No near-term compelling catalysts.
- Excessive leverage of10 instances 2020 internet debt/TTM EBITDA.
price Motion: Shares of ViacomCBS had been buying and selling decrease by 3.3% at $35, whereas shares of Discovery had been down 2.5% at $28.02 and shares of iHeartMedia had been decrease by 4.5% at $12.08.
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