Analyst: Ad Market, Uncertainty Weigh on Stocks
Bazinet Lowers Sector Estimates
Mike Farrell -- Multichannel News, 2/2/2009 12:32:51 PM
Citing macro-economic concerns, particularly the cratering of the advertising market, Citigroup media analyst Jason Bazinet lowered his estimates for much of the sector, warning that the outlook could be worst at The Walt Disney Co., marvel Entertainment, Charter Communications and Warner Music Group.
Bazinet lowered his fourth quarter 2008 and full-year 2009 estimates on six stocks - CBS, Comcast, Cablevision Systems, Dish Network, Liberty Interactive and Viacom. But Bazinet wrote that the biggest risks reside at Disney (he believes the 2009 consensus is still too high), Marvel (DVD sales could disappoint), Charter (which he believes is likely to file for bankruptcy and Warner Music (he thinks the music giant is grappling with industry trends and debt covenants).
But Bazinet also believed that many of those stocks could rebound in the coming year - he wrote that many have strong fundamentals, it's just that the volatile stock market can't be trusted. On that note, he wrote that his top picks for the year are two of the most battered issues in the sector last year - Dish Network (down 66.5% in 2008) and Time Warner Inc. (down 30% in 2008).
Bazinet wrote that he believes Dish has a compelling valuation (less than 10 times cash flow) and is expected to improve churn. He likes Time Warner inc. for the potential catalysts - a potential sale of AOL and the spin-off of its cable unit.
The downgrade didn't appear to put that much pressure on the shares, at least in early trading. Charter was down the most - it dropped 12% (1 cent) in early trading Monday to 8 cents each - followed by Cablevision (down 4% (62 cents) to $15.41); Disney (down 2.6%, or 54 cents to $20.14; Viacom (down 2.6%, or 42 cents to $15.85) and Time Warner Cable (down 35 cents or 2% to $18.28) and Time Warner inc., (down 13 cents, or 1.4% to $9.20); Comcast (down 81 cents or 0.6% to $14.57); and CBs (down 4 cents, or 0.7% to $5.68).
The rest of the sector was up slightly -- Dish Network rose 8 cents (0.6%) to $12.88 and News Corp. was up 2 cents (0.3% )to $7.26 per share.
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