Morgan Stanley included AMC Networks among 10 stocks with positive catalysts that could push its stock price higher over the next 15 to 60 days.
The brokerage says that even though ratings for The Walking Dead were down about 10%, ad revenues should still be above the Wall Street consensus.
“AMC’s relatively small size and recent content success should enable it to outgrow Media peers despite broader secular pressures affecting the TV ecosystem,” Morgan Stanley said in its report. “Longer-term, we believe AMC's shift toward high-end scripted originals – years in advance of cable network peers – positions it more favorably as on-demand / time-shifted viewing proliferates and consumers reallocate their viewing time to ‘high-affinity’ programming (such as AMC's scripted originals), away from more passively-consumed repeats.”
Morgan Stanley puts the bull case pushing the stock to $108 a share as programming investments generate strong return on domestic ad revenues on AMC, while its other national networks continue to grow their ad revenues, and margins expand.
AMC will have the mid-season premiere of The Walking Dead on Feb. 14, and Better Call Saul’s second season launches Feb. 15.
The company reports earnings in late February.
AMC shares traded at $71.36 in mid-day trading Wednesday amid a broader market that's sharply lower, particularly for media stocks.