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Bank Of America Downgrades AMC, Citing Limited Catalysts

Priya Nigam

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.

The Analyst

Bank of America’s Bryan Goldberg downgraded AMC Networks from Buy to Neutral, reducing the price target from $70 to 54.

The Thesis

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.

View more earnings on AMCX

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.

Price Action

Shares of AMC Networks were down 2.48% to $43.84 at the time of publishing on Wednesday.

Latest Ratings for AMCX

Date Firm Action From To
Oct 2019 Downgrades Buy Neutral
Oct 2019 Downgrades In-Line Underperform
Oct 2019 Downgrades In-Line Underperform

View More Analyst Ratings for AMCX
View the Latest Analyst Ratings

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