AMC Networks Faces Sell Rating Amid Revenue Challenges and Streaming Struggles

Analyst Steven Cahall of Wells Fargo maintained a Sell rating on AMC Networks (AMCX – Research Report), retaining the price target of $4.00.

Steven Cahall has given his Sell rating due to a combination of factors affecting AMC Networks. The company continues to face a challenging environment, with management focusing heavily on cost controls to maximize free cash flow. Despite some positive aspects like free cash flow slightly exceeding expectations, revenue growth remains a significant hurdle, and the company’s first-quarter revenues fell short of expectations due to timing issues with content licensing revenues.
Additionally, AMC Networks is experiencing difficulties in its streaming segment, with a decline in direct-to-consumer net additions and streaming revenues not meeting expectations. The company’s valuation is based on a break-up story, with a blended multiple that results in a price target of $4, reflecting ongoing pressures in linear advertising and challenges in growing direct-to-consumer subscriptions. These factors contribute to the Sell rating as the company’s financial outlook remains pressured, with limited prospects for improvement in the medium term.

Cahall covers the Communication Services sector, focusing on stocks such as Paramount Global Class B, Roku, and E. W. Scripps Company Class A. According to TipRanks, Cahall has an average return of 6.1% and a 52.35% success rate on recommended stocks.

In another report released on May 9, J.P. Morgan also maintained a Sell rating on the stock with a $6.00 price target.