Several media stocks were sized up by an analyst as the sector saw ongoing changes from cord-cutting and the growth of streaming platforms.
The Analyst Ratings: Goldman Sachs analyst Michael Ng initiated coverage on the following stocks with the following price targets.
Walt Disney Co (NYSE:DIS): Buy rating, $125 price target
Comcast Corp (NASDAQ:CMCSA): Buy rating, $44 price target
Fox Corp (NASDAQ:FOX)(NASDAQ:FOXA): Buy rating, $42 price target
Warner Bros. Discovery (NASDAQ:WBD): Neutral rating, $8.50 price target
Paramount Global (NASDAQ:PARA)(NASDAQ:PARAA): Sell rating, $9.50 price target
Stagwell Inc (NASDAQ:STGW): Neutral rating, $6.50 price target
The Analyst Takeaways: Competition from streaming platforms, social media and technology companies is challenging the media sector, Ng wrote in a new investor note.
"We prefer U.S. media stocks with deep competitive moats that should provide better visibility into growth," Ng said.
The analyst said lower exposure to linear television, higher exposure to sports and news, strong portfolios of brands and a direct-to-consumer segment close to profitability will make a media company stand out.
"The U.S. media conglomerates (DIS, FOXA, WBD, PARA and CMCSA) have an average growth outlook that includes 3% revenue growth, 5% EBIT growth, and 7% EPS growth."
Ng said the media sector faces increased competition as social media and internet companies establish direct relationships with consumers.
"This shift from traditional to internet content distribution has reduced the bargaining power of TV/film studios and linear TV networks."
Media companies also face the ongoing threat from streaming leader Netflix Inc (NASDAQ:NFLX), Ng wrote.
The analyst said Netflix has done a better job of tailoring content to its audience with recommendation engines and hitting on trending themes ...Full story available on Benzinga.com
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