JPMorgan Calls CBS, 21st Century Fox, AMC Networks 'Near-Term Favorites'

Media stocks performed mostly in-line with the broader market last month, and are likely to outperform over the next month, JPMorgan’s Alexia S. Quadrani said. The analyst named CBS Corporation (NYSE: CBS), Twenty-First Century Fox Inc (NASDAQ: FOXA) and AMC Networks Inc (NASDAQ: AMCX) as the favorite names for the next month.

CBS

The company has an Overweight rating. Quadrani mentioned that CBS topped their rankings, since the recent pullback in shares had resulted in an attractive entry point. The EPS estimate for 2016 had recently been raised to $4.03.

The analyst believes there is further upside to this estimate from “continued strength in the national TV ad market, a record year for election spending benefitting local broadcasters, and potentially better content sales in the back-half of this year.”

Twenty-First Century Fox

The company has an Overweight rating and is another top pick for the near term, since shares underperformed large-cap media peers last month. Quadrani believes that the company is poised to benefit from “ongoing TV ad market strength and the national election, which is powering ratings gains at Fox News.”

The analyst added that the May 27 release of X-Men Apocalypse would also lend upside, while noting that a successful release would “build confidence for the studio's other summer tentpole releases Independence Day: Resurgence and Ice Age: Collision Course.”

AMC Networks

The company has a Neutral rating. The stock has been “the biggest upward mover in our ranks for the month,” Quadrani said, citing bullish expectations for the May 22 premiere of Preacher, which has witnessed early positive reviews and is likely to be boosted by positive word-of-mouth.

“Agencies stay toward the high end our ranks, as we believe the current fragmenting media environment remains highly favorable for the holding companies, which are seeing a greater need for their expertise on the media buying/planning side, and an increased scope of work on the creative side,” the analyst wrote.