LinkedIn, NFL, Ad Forecasts, Yahoo Spam, Buybacks: Wall Street Report 12-9

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In a relatively quiet, post-earnings week, analysts spent some time readjusting their forecasts and recommendations. One stock to see an upgrade was business social network, LinkedIn (LNKD). J.P.Morgan analyst Doug Anmuth upgraded the stock to Overweight from Neutral based on a valuation call. LinkedIn shares have dropped 36% since their July 15 high and 20% since their 3Q earnings announcement and a follow-on offering. JPM likes the firm's strong operational performance and with deeper corporate penetration and member engagement, the Internet firm has a long runway ahead of it. Anmuth placed a $84 target on the shares.

While the professional football season is quickly coming to a close, so is the next round of negotiations the league is conducting with broadcast partners. In a note to clients this week, Nomura's Michael Nathanson wrote that average annual rights payments to CBS (CBS), Fox (NWSA), and NBC (GE) in this new scheme should be at least $1 billion.

This is close to a 60% step-up from the last deal -- the combined rights fees among the three networks are expected to exceed $24B. In addition to these negotiations, it appears the NFL is going to hold back some additional games to be held on Thursday nights for bidding by the cable networks. Nomura's Nathanson said that he expects "Time Warner (TWC), Comcast/NBCU newly branded NBC Sports Network (formerly Versus) and News Corp to all bid aggressively for this package."

Networks may be paying up for in-demand football content, but they're pretty much doing this across the sports spectrum. They're doing this in anticipation of increased advertising revenues for 2012. According to MAGNAGLOBAL's Global Advertising Forecast released this week, global ad revs are expected to grow next year, led by strength in BRIC and sports spending.

2012 growth is expected to be in the 5% range, totaling almost $450 billion. "Quadrennial events, combined with the scale and dynamism of the BRIC countries will help sustain global growth despite worsening economic outlook," the report said. China is expected to become the second largest advertising market in the world, eclipsing Japan, in 2012. Though revenues are expanding, the media firm has reduced its expectations for the next year by 1.5%.

While on the subject of 2012 projections, WPP's GroupM also released this week its biannual worldwide report "This Year, Next Year". The firm expects "a vigorous Japanese advertising recovery" after the country's devastating natural disasters and the Olympics to drive global ad spending up 6% over 2011.

"Spending growth in 2012 will be driven primarily by local media where we expect $2.5--$3 billion dollars in political campaign advertising and advocacy initiatives," said Rino Scanzoni, GroupM's Chief Investment Officer. "National media will see a slowing in growth as the economy continues to face head winds."

As we wrote about in last week's Wall Street Report, Yahoo (YHOO) may be struggling to sell itself but the Internet media firm saw a small windfall this week. "After five years and nearly 12 million obviously nefarious e-mails alerting readers they've won lots of money, Yahoo has been awarded a massive judgment against a host of Nigerian and Thai scam artists who have sullied the portal's good name. Collecting, though, is another matter," wrote The Hollywood Reporter.

A court awarded Yahoo a $610 million default judgment against several defendants who didn't even respond to the accusations of fraud leveled against them. According to CNET, "Yahoo is unlikely to see much, if any, of the judgment award given that the defendants are located in other countries and have not responded to the complaint or appeared in court."

After promising to return $20 billion to shareholders via buybacks and dividends last week, Viacom (VIAB) announced a $1 billion debt offering this week. Low interest rates have given the opportunity for the global media conglomerate to refinance some existing debt.

As Viacom demonstrated, debt financing is pretty cheap in this market. Barclays Capital's Anthony DiClemente spent some time this week analyzing what cash-flush media companies could begin doing with all that money. As we mentioned in last week's report, Disney (DIS) boosted its dividend and DeClemente believes more firms will do so, as well.

"Buybacks, while still a form a capital returns, have the potential to destroy shareholder value if shares are purchased above intrinsic value, a legitimate risk in the context of an uncertain macro environment which could weigh on stock valuations," the media analyst said in a research note published this week. "Also, with low borrowing costs for investment grade credit and corporate balance sheets flush with cash, we believe strategic acquisitions, particularly for international assets, could help boost relatively sluggish top line growth." He cited Viacom (VIAB) and Time Warner (TWX) as two firms likely to make more strategic moves with their cash.

Vacation rental marketplace and recent IPO HomeAway (AWAY) saw some analyst love from J.P.Morgan after the investment bank's SMid Cap Conference in New York.

"We remain positive based on the compelling network effect-driven business model and our belief that HomeAway is in the very early stages of a number of key initiatives that should increase both listings and average revenue per listing (ARPL). We believe HomeAway shares have been under pressure related to lock-up concerns, broader weakness among small and mid-cap Internets, valuation, and the potential for increased competition," JPM's media analyst Shelby Taffer said.

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