AMC, DIS, NWSA, AOL, DISC, and More Media Wall St. Reports 5/11/12

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News Corp

News Corp (NWSA) might not have hit it out of the park when the media firm released its quarterly earnings, but it did give investors something to cheer about: 5 billion things to cheer about actually, according to Nomura analyst, Michael Nathanson. He was very appreciative of the firm's authorization of $5B in additional share buybacks, taking the total up to $10B for 2012. Barclays' Anthony DiClemente called the buybacks "the X factor." Combined with cable's strong affiliate fee growth (15%) and 10% US advertising growth, Nathanson is sticking to his Buy on the stock, calling it "one of the most attractive media stocks from this point on."

Credit Suisse's Spencer Wang thought the quarter looked much more mixed, though, with local advertising and the Aussie newspaper business both points of softness. While he thinks the stock is still cheap at 6x FY13 EV/EBITDA, he's maintaining his Neutral rating and price target of $20. DiClemente at Barclays also believes the overhang or what he calls, the "Murdoch discount" will gradually diminish as the firm's cash gets deployed effectively.

AMC

The Walking Dead has breathed new life into AMC Networks (AMCX). The firm reported Q1 results that surpassed the Street's expectations on most metrics. AMCX benefited from additional original programming and new syndication of its hit zombie show. The record ratings of the show has driven industry-leading ad growth of 30% and improving organic affiliate fee growth of 15%. That prompted Barclays' analyst Anthony DiClemente to raise his price target $2 to $42. He's waiting for a positive resolution to the carriage dispute with DISH and the VOOM lawsuit before getting more constructive on the name.

Priceline

After delivering a monster quarter, investors named their own price for Priceline.com (PCLN). Unfortunately, that price was almost 5% lower than where the firm closed Wednesday's trading. That's because the firm, while delivering strong quarterly performance that surpassed the Street's expectations, gave underwhelming 2Q guidance. Barclays' Perry Gold likes the online travel agency's international bookings growth of +54.2% over the same period last year and expects PCLN to do $31.49 in 2012 PF 2012. He reiterated his firm's Overweight ratings on PCLN.

Aol.

While investors are focused on getting capital returned to them, it's worth mentioning AOL (AOL). After selling its patent portfolio for what's worth about $10/share in cash, the media company announced it plans to return all that money to its shareholders' pockets by the end of 2012. The firm's results are improving, too, delivering big upside in 2012 EBITDA guidance ($350M, up from $310M). Needham's Laura Martin boosted her FY12 estimates based upon performance. Her revenue estimates are now $2.11B (revised up 1.2%) as she expanded her adjusted EPS almost 40% to $1.08.

Discovery

While the market struggles this year, Discovery Communications (DISCA) has been one of media's strongest names, up 24% ytd. The company's own success is what analysts like Nomura's Michael Nathanson think may weigh on the stock in the future. He expects international growth to continue and ratings momentum to lead to a favorable upfront season. That said, DISCA missed his EPS target of $0.61, coming in $0.04 light. Nomura is leaving its CY12 EBITDA growth unchanged at 13% and even raised its top-line forecast to 9.1% growth (up from 8.6%). But, given high expectations and a pretty rich P/E multiple, the analyst and his team believe the stock is pretty fairly valued here.

Demand Media

Demand Media (DMD) topped Mike May's expectations for the quarter with sales of $83M and EPS of $0.07. The Barclays analyst was impressed by the top-line growth numbers the Internet content giant put up in its Network division (+38%) and Registrar biz (+17%). Management raised guidance and May raised his price target for CY12 to $10 from $9.

Disney

Disney (DIS) continues to impress analysts with its financial performance and Q1 was no exception. The media conglomerate reported better than expected results, growing its EBIT 10% y/y to $1.95B. Margins came through in Cable Networks, Theme Parks and Broadcasting. Excluding one-time items, EPS of $0.58, beat Credit Suisse's Spencer Wang's predictions by $0.07. He thinks the Park recovery is "on track" and not structurally broken. He took his numbers up and raised his PT to $50 (from $45).

Bo Tang, an analyst at Barclays, also took his price target up to $48 (it was $44) based on the strong debut of Avengers (a record-breaking $207M opening weekend in US), ad growth at ESPN (6% on the quarter), and a pace of share buybacks that is likely to accelerate.

While on the topic of Avengers, Janney's Tony Wible believes the success of the movie "will benefit financial results for DIS for years to come." Not only will it benefit the Studio division, but the film is already driving high margin consumer licenses. Even Parks and Media Networks could feel the lift as DIS evaluates plans to incorporate Marvel's assets.

Liberty Media

Wible, Janney's well-known media guru, also published on Liberty Media Corporation (LMCA) after the firm reported $440M in quarterly revenues that missed the analyst's expectations. Starz partially caused the fall, but Wible believes LMCA is well on its way to monetize its investment portfolio through its SIRI holdings, share buybacks and the sale of non-core media assets. He's standing firm with his $107 fair value estimate on the stock.

Charter Communication

Charter Communications (CHTR) reported an impressive jump in PSU net adds: +211k vs. Credit Suisse's Stefan Anninger's +117k estimate. The analyst explained in a research note this week to investors that the PSUs growth came in all categories, with particular strength evidenced in HSD. This customer growth came at a cost as CHTR's expenses ballooned in the quarter. Surprisingly, for the first time since 2007, Charter posted positive video net adds. He's at a $74 PT and an Outperform on the shares.

Pandora

Users continue to stay plugged in to radio streamer Pandora Media (P) as the firm continues its blistering pace of gaining market share in radio listening. April audience metrics showed hours increasing 87%, active listeners growing 52% and share of US radio listening expanding to nearly 6% (from 5.79% a year ago). JP Morgan analyst Doug Anmuth sees continued expansion in user growth, primarily through mobile radio streaming.

"We recognize that very strong growth in usage hours driven by mobile will continue to weigh on profitability in the near term, but in the meantime, we believe Pandora will build significant market share and that the ability to monetize mobile hours will improve over the next few years and drop down to the bottom line," he wrote in a note sent to investors this past week.

Cinemark

A strong movie pipeline is clearly helping the box office as Cinemark Holdings (CMK) put in a solid showing for the quarter. Robert Fishman at Nomura took up his growth estimates for the firm's EBITDA to 15.5% (from 14.5%) and consequently, boosted his forecast of 2013 EPS up $0.05 to $1.84 by including some more cost savings. The movie chain's domestic business is behaving nicely (growth is 10.2%) as international will begin to face tougher 2Q comps. He raised his firm's PT on CMK to $27, up $1 based on the rapid growth of its Latin American assets.

DirecTV

Impressive Latin America growth is also occurring at DirecTV (DTV). While results came in-line to below estimates in the U.S., LatAm beat again. Gross adds of 1034k beat the Stefan Anninger's (Credit Suisse) estimates. Revs south of the border also came in above consensus estimates at $1.485B (vs. $1.460B). Buybacks totaled $1.26B on the quarter, in line with estimates.

Dish

Dish Networks (DISH), on the other hand, turned in really impressive net adds (Anninger called them "stellar"). Again, these adds were expensive and drove the bulk of an EBITDA shortfall at the DBS unit. Lower churn (1.35%) helped drive the impressive net adds. With downward pressure on earnings, Anninger needed to take his numbers down — FY12 EPS is now $2.75 (from $2.82). He thinks the stock is cheap and maintains his Outperform rating.

Millennial Media

While bullish on the mobile ad sector, Barclays initiated coverage on fresh IPO Millennial Media (MM) with an Equal Weight because apparently, the valuation already reflects the firm's bullishness. It's all about monetizing the mobile app economy now as smartphone sales are growing 40% around the globe. Analyst Kevin Allen believes advertising is following this curve, with mobile advertising representing one of the fastest-growing opportunities in media. As the 2nd largest mobile ad network (Google's the biggest), MM is positioned really well. Investors expect strong growth and valuation is rich as the analyst launched his overage with a $17 PT.

Lamar

Stable revenue growth (over 4%) and slightly lowered costs characterize Lamar Advertising Co's (LAMR) quarter. The outdoor advertising firm was able to keep its pro-forma expanse line growth (3.5%) below the numbers forecast by Barclays' analyst Chris Merwin (5%). Digital business continues to grow at an impressive clip as the company is making fine progress to reaching its goal of 200 new digital billboards in 2012. Merwin's sticking to his Equal Weight and $32 PT.

Clear Channel

If LAMR is characterized by the stability of its financial performance, competitor Clear Channel Outdoor (CCO) had a more disappointing Q1. Revenues, costs and estimates all somewhat disappointed the Barclays analyst. Due to "anemic revenue trends in the Americas," a sharp jump in expenses, and a massive $6.08 special dividend paid out in the quarter, Merwin cut his PT to $6 from $12.

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