AMC Networks Inc’s (NASDAQ: AMCX) third-quarter results could reflect higher licensing activity, offset by touch comparisons and subscription losses, according to Bank of America.
Bank of America’s Bryan Goldberg downgraded AMC Networks from Buy to Neutral, reducing the price target from $70 to 54.
AMC Networks is likely to report low-single-digit affiliate declines and tough advertising comparisons due to fewer episodes of Fear The Walking Dead being aired and the absence of 'Better Call Saul' on its flagship channel, Goldberg said in the downgrade note.
He projected the company’s third-quarter revenue at $735 million, representing 6% year-on-year growth, annual operating income of $205 million, down 3%.
Ratings softness is expected to have adversely impacted advertising at National Networks softness, while weak multichannel video programming distributor (MVPD) trends are likely to result in a decline in affiliate fees.
Goldberg further expects mix shift towards owned content to have resulted in an increase in technical and operating expenses.
He lowered his third-quarter adjusted earnings estimate from $1.78 per share to $1.70 per share.
The analyst also reduced his 2019 adjusted earnings estimate from $8.52 per share to $8.97 per share, while saying that there is increased likelihood of Pay TV subscription losses accelerating in the back half of the year.
Shares of AMC Networks were down 2.48% to $43.84 at the time of publishing on Wednesday.
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