With the cost of the streaming wars accelerating, Wall Street will likely spend much of the New Year debating what subscriber trends and production budget news will mean for the winners and losers of 2022 stocks.
And the impact of the coronavirus pandemic, notably the omicron variant, on businesses will also be at the center of concerns for analysts and investors who are weighing where to place bets in the new year.
Below, Hollywood journalist provides an update on recent updates and stock picks from six media entertainment analysts for the coming year.
Tim nollen, Macquarie
Choice : Discovery and Disney.
Why: The analyst improved Discovery in November with a share price target of $ 40, citing “strong growth from Discovery +, WarnerMedia’s upcoming transformational merger and cheap valuation.” And he pointed out in a December memo: “We believe that over the next year or so, the Discovery title should be a highlight in the media industry given the favorable winds and the thesis. “
Nollen also likes Disney, even though he used his December report to lower his price target from $ 10 to $ 185. “Our bullish thesis around Disney stocks has centered on strong growth in the number of direct-to-consumer subscribers and a cyclical recovery in parks and theater companies,” Nollen detailed. “While the macro environment with new COVID variants has driven the recovery in the park and theatrical businesses, and Disney + subscriber growth has been a bit weak recently, we’re still fundamentally positive on the stock.” His conclusion: “Disney remains a long-term winner in the streaming wars.”
Amobi tuna, CFRA Research
Choice : Netflix, Disney, Comcast, AMC Networks, Lionsgate and Living country.
Why: “Over the next year or so, we believe some of the potential catalysts for media and entertainment stock performance include the continued reopening of the global economy – subject to containment of omicron or other COVID variants. -19 as a potential risk factor, key milestones on further execution of a global streaming strategy – subscriber / audience growth, international penetration, free cash flow and / or profitability trajectory, etc. pent-up consumer demand for live sports and out-of-home entertainment.
Steven cahall, Wells Fargo
Among his choices: Imax
Why: “We are optimistic in 2022,” the analyst wrote in a Dec.16 report. “We believe that exhibitors’ mindsets have improved despite omicron, consumer appetites for premium cinema continue to manifest and the list of content is unprecedented. We believe that Imax’s box office has potential, driven by the percentage of Imax at the domestic box office which probably tends to be higher than history given the “power list” of releases. His conclusion: “We think this could be one of the best small and mid-cap media outlets of 2022 with the next catalyst potentially a positive revision of mid-term estimates on a prospect of settling into fourth quarter 2021 earnings.”
Michael pachter, Wedbush Securities
Why: “Zynga by a lot,” the analyst says of his favorite entertainment title for 2022. After all, it “is trading at pre-COVID levels with much larger revenue and profits than in early 2020, and they have a bunch of new games coming, “says Pachter.” The stock is trading at a low multiple with earnings growth, so it is expected to double in 2022. “
Eric Manager, MKM Partners
Why: “We have a positive view of the entry of the video game industry in 2022 as secular trends remain positive, fundamentals are attractive and valuations are at the low end of historical trading ranges,” explained the analyst in a mid-December report. “Zynga is well prepared for double-digit bookings growth in 2022, driven by new game releases and contributions from recent acquisitions. Additionally, we see an attractive free cash flow story building over the next 24 months as the company nears the last of its M&A related supplement payments in the first quarter of 2022. ”
Benjamin swinburne, Morgan Stanley
Choice : Fox corp., Effort, Spotify and current favorite hia Warner Music Group.
Why: “The growth of streaming, advertising and live entertainment will lead to strong revenue growth in media and entertainment in 22,” the analyst wrote in a preview of the coming year. “Our best ideas for next year can cope with rising content costs and translate (revenue growth into rising profits.” “He picked two audio entertainment winners.” This provides a compelling setup for the owners of audio content (Warner Music) and the distributors of that content (Spotify), both of whom should benefit from the backdrop of secular growth, ”explained Swinburne.