Media

UBS Sees Big Upside to 4 Media and Entertainment Stocks

Netflix

The stock continues to be a top media play on Wall Street, and many are now starting to anticipate a stock split in the streaming content giant. The consensus on Wall Street is that Netflix Inc. (NASDAQ: NFLX) is likely to continue to benefit from a materially stronger original content launch, which would bolster the already strong franchises like the hit political show “House of Cards.” With many consumers tired of rising cable and carrier content prices, the streaming leader may have a big 2015 and beyond in front of it.

Investor sentiment continues to stay positive on the stock as streaming hours and time spent on continues to rise. In fact, the company recently noted that it logged 10 billion streaming hours in the first quarter, up 20% year-over-year.

Netflix posted solid earnings and strong subscriber additions. Plus, the stock has been targeted by legions of short-sellers that have been eviscerated over the past couple of years. Almost 10% of the float was short as of May 15.

Although rated Buy at UBS, the current price target is “under review.” The consensus target is $592.76. That falls below Tuesday’s close at $623.91.

Time Warner

This is a top media stock to buy at UBS and with good reason. Time Warner Inc. (NYSE: TWX) owns a wide name of entertainment brands, including TNT, TBS, CNN, HBO, Cinemax, Warner Bros., New Line Cinema, People, Sports Illustrated and Time. The company also offers investors diversity in earnings with a multitude of revenue silos.

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Time Warner has a spot on all three of the top over-the-top (OTT) content providers, and with an absolute ton of content that the company sells through DVDs, Blu-ray discs and electronic sell-through, as well as licensing home entertainment and content to international television networks and SVOD services, the future is very bright. In broadcasting, OTT refers to delivery of audio, video and other media over the Internet without the involvement of a multiple-system operator in the control or distribution of the content.

Time Warner investors are paid a 1.65% dividend. The UBS price objective is $104, and the consensus target is set at $95.55. The stock closed Tuesday at $84.72.

Viacom

This is another company in a total sweet spot for content and OTT. Viacom Inc. (NASDAQ: VIAB) creates television programs, motion pictures, short-form video, applications, games, consumer products, social media and other entertainment content. It operates in two segments: Media Networks and Filmed Entertainment. The Media Networks segment provides entertainment content and related branded products through approximately 230 programmed and operated TV channels, including MTV, VH1, CMT, Logo, BET, CENTRIC, Nickelodeon, Nick Jr., TeenNick, Nicktoons, Nick at Nite, Comedy Central, TV Land, SPIKE, Channel 5, Tr3s, Paramount Channel and VIVA, as well as through online, mobile and apps.

The company recently delighted shareholders with a very rich 21% dividend increase. The raised dividend will be paid on July 1, 2015, to shareholders of record as of June 15, 2015. Viacom has continued to reward shareholders and enhance its brands worldwide through the creation and acquisition of popular programs, new channels, successful motion pictures and other forms of entertainment, including video game offerings.

Viacom investors are paid a 2.40% dividend after the increase. The UBS price target is $81, and the consensus target is at $77.42. The stock closed Tuesday at $66.09.

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With online advertising expected to be surpassing standard TV spot advertising this year, things are definitely changing. The UBS top companies to buy should remain not only relevant to consumers, but to shareholders as well.

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