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Many entertainment industry CEOs and investors may want to quickly forget about 2022, given the sharp declines in various media sector stocks in 2022.
However, 2023 doesn’t look like it will bring much relief anytime soon. After all, fears of a recession and its impact on ad revenue, the recent acceleration of cord-cutting, and concerns about the profitability of Hollywood companies’ streaming businesses are among the dark clouds hanging over the industry.
With this in mind, hollywood reporter Several media and entertainment analysts are evaluating options for the coming year.
Michael Nathansonmoffett nathanson
Featured: walt disneyfox
why: The veteran entertainment analyst has an “outperform” rating on both companies. Nathanson upgraded Disney from “market perform” in late November and raised his stock price target by $20 to $120, citing the return of Bob Iger as CEO. “The magic is back,” he summed up his call in the headline of the report. “We applaud the courage of the Disney board to make this change,” the expert explained. “We’ve made no secret of our love for Mr. Iger and the work he’s done in building Disney into a global powerhouse. We haven’t recommended these stocks since May 2020 for a number of reasons, including concerns about the former chief Executive Bob Chapek has become obsessed with a streaming strategy that doesn’t make sense in today’s reality.”
For Fox, Nathanson has a price target of $46, and he is potential restructuring Partnering with News Corp., but he emphasized in a November report: “As a stand-alone company, Fox is just beginning to see its current strategy pay off, with first-quarter earnings and the rest of fiscal 2023 subject to the next hurdle. The rounds of boosting affiliate fees, the Super Bowl, political ads, Tubi, the World Cup and the biggest positive impact on the bottom line — thursday night football The loss disappears. “
John BlackledgeCowen
Pick: Netflix
why: The analyst raised his long-term subscriber, revenue and operating income forecasts for the streaming giant on Dec. 9, raising his stock price target to $405 from $340 as a result. All in all, he called Netflix, which he rates as an “outperform” on Cowan’s “Best Ideas for 2023” list, and his “top pick for a large-cap stock.” Blackledge explained: “The main drivers for Netflix’s share price in ’23 are (i) new monetization levers, including new lower-priced ad tiers (which could drive accelerated net member additions) and the global rollout of pay-sharing solutions in ’23 scenario; (ii) revenue reacceleration in 2H23; (iii) free cash flow growth acceleration.”
Michael PachterWedbush Securities
Pick: highest quality
why: In November, Pachter added giant-screen exhibitor Imax to Wedbush’s “best ideas list,” and he has an “outperform” rating on the stock with a $20 price target. “We think Imax is 1) the best way to meet the coming rebound in theaters, 2) the best way to benefit from consumers’ continued shift to premium theater facilities, and 3) a solid way to position China for economic recovery,” he explained road. In the long run, experts also believe it is “most likely to benefit from theatrical alternative content.” Citing the expected return of box office momentum, Pachter predicts: “Once Imax can demonstrate sustained profitability, it should command a premium multiple again.” .”
doug cruzCowen
Pick: Two people interact software
why: The entertainment industry analyst highlighted video game stocks in a Dec. 12 report titled “Top Ideas for 2023: Returning to Old Love,” reiterating his “outperform” rating and $147 stock price target. . “Take-Two is a top operator in the global video game market with the best long-term track record among its peers,” he said. “Management’s recent downgrade of guidance for video games and general investor unease create an attractive entry point.” Creutz touted the company’s “development talent, intellectual property, and strong management” and called Take- Two called it “a high-quality vehicle to invest in an area where we expect video games to outpace GDP growth over the next decade.” The expert further said, “The market in general is too pessimistic about the Zynga acquisition and mobile gaming.” Creutz wants more clarity on the release date grand theft auto 6 In the new year, this could be a catalyst for the stock: “We continue to expect grand theft auto 6 In the 2024 calendar year. ”
benjamin swinburneMorgan Stanley
Featured: Endeavor, Warner Music Group, Liberty Media – Formula 1 Group
why: “Direct-to-consumer streaming is entering a new phase: rationalization and consolidation,” Swinburne said in its outlook report to 2023, published on 19 December. “Over the long run, that should boost returns. For ’23, we prefer the supply side — content owners in sports, entertainment and music.” Specifically, that means “overweight”-rated Endeavor, His top picks, Warner Music Group and Liberty Media’s Formula 1 Group. “All of these provide healthy, often contracted revenue and free cash flow growth,” he stressed. “In the global media industry, circulation is expanding, sticking to the supply side.” Swinburne highlighted that Endeavor (50% above his $30 price target) “monetizes sports and general entertainment content,” while Formula 1 ( 30% above his $75 price target) “benefits from the growing global popularity of Formula 1” Meanwhile, Warner Music (20% above Swinburne’s $41 price target) “is three Together, they account for around 80% of global music consumption.” Morgan Stanley analysts added: “Endeavour and Formula 1 also benefited from highly contracted revenues, limiting a cooling economy leading to downward revisions risks of.”
Steven CajalFuGuo bank
Featured: lionsgate and more
why: “Media themes are skewed negative (ad pressure, cord-cutting, streaming slowdown),” analysts highlighted in a Dec. 20 note, and argued the broader industry would “remain positive until at least cyclical pressures subside. not favored”. So, on the media side, “We prefer Disney and Netflix (content + streaming scale, they’re both self-help stories), Fox (cash flow, sports betting, modest valuation), Lionsgate (deals) and Imax (tech + slate ).” Cahall has an Overweight rating on Lionsgate stock with a $12 price target. “Lionsgate should be attractive after the spin, but it feels far away,” he wrote in a recent note. Rotation mid-2023. While we’re not bullish on Starz’s valuation, we think Studios is worth as much or more than current companies.” After all: “This is a gold rush for content, and Lionsgate can capitalize on its Studio business.” Become a supplier of pickaxes.”
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