Discovery and Disney will be closely watched, and Zynga is becoming one of the most popular.

With the cost of streaming wars increasing, Wall Street is likely to spend the bulk of this year debating the trends of subscribers and news on production budgets that will impact 2022’s stock the winners and losers.

And the effect of the coronavirus epidemic, especially the Omicron variant, on companies will also be the spotlight for investors and analysts in deciding where to bet for the coming year.

Here, The Hollywood Reporter takes an inventory of six media-entertainment analysts who have recently upgraded their stock and selections for the year ahead.

Tim Nollen, Macquarie

Selections for: Discovery and Disney

Why is it that the analyst reaffirmed Discovery in November, setting a price target of $40, and cited “strong Discovery+ growth, the coming transformative WarnerMedia merger, and a low valuation.” He also stated in a December report: “We believe that over the next 12 months, Discovery stock will become an attractive investment in the media industry due to the growth and tailwinds.”

Nollen likes Disney; however, the December report he wrote to reduce his price target from $185 to $10. “Our conviction in the bullishness of Disney stock is based around the strong growth in direct-to-consumer subscribers as well as a cyclical improvement in the theatre and park business,” Nollen detailed. “While the macro-economic environment and new COVID variants have made it harder for the recovery to take place at the theatre and park businesses in addition to Disney+ subscribers have been slow in recent times, but we are very positive about this stock.” The conclusion of Nollen: “Disney remains a long-term winner in the war of the streaming.”

Tuna Amobi, CFRA Research

The best picks are Netflix, Disney, Comcast, AMC Networks, Lionsgate, and Live Nation.

What’s the reason: “Over the next year, we believe that some of the catalysts that will impact the performance of the media and entertainment stocks are the continuing opening for global business subject to the limitation by the Omicron or COVID-19 variants that could be a risk factor, crucial points in the continued execution of a global stream strategy, including growth in subscriber/audience and international expansion or free cash flow the trajectory of profitability, and so on. Major M&A declarations, or perhaps a series associated activity such as the possibility of takeouts, and further announcements of the lingering demand from consumers for live sporting events and out-of-home entertainment.”

Steven Cahall, Wells Fargo

In his top picks: Imax

The reason “We’re optimistic about 2022,” an analyst said in December. report on 16 December. “We believe that the exhibitors’ expectations are changing regardless of Omicron, and the growing demand from consumers for high-end theater experiences continues to grow, and the slate of content is unparalleled. We believe this year’s Imax box office is a positive one due to Imax’s percentage of domestic box office likely to be higher than the norm because of the ‘power’ slate of films.” The conclusion of the analyst: “We think this could be among the top media small and mid-caps in 2022 with the next catalyst possibly an upward revision to estimates for a medium-term installation outlook in the fourth quarter 2020 results.”

Michael Pachter, Wedbush Securities

Pick: Zynga

What’s the reason “Zynga significantly,” says the analyst of his favorite entertainment stocks for 2022. “The company currently trades for a low multiple, which is correlated with growth in earnings which means it will likely double by 2022.” in the end, it’s “trading in pre-COVID conditions with more profit and revenue than they had in early 2020. They also have an array of new games in the pipeline,” Pachter explains.

Eric Handler, MKM Partners

Pick: Zynga

What’s the reason “We are optimistic of the video game industry in 2022 because the secular trend remains positive, fundamentals look attractive, and valuations are on the lower end of historical trade ranges,” an analyst said in his report from mid-December. “Zynga is well-positioned for growth of bookings that will be double-digit in 2022, driven by the latest game releases as well as contributions from recent acquisitions. Additionally, we expect an appealing free cash flow model forming over the next few months, as the company approaches the final payment of M&A related earnout payments during the first quarter of 2022.”

Benjamin Swinburne, Morgan Stanley

Favorites: Fox Corp., Endeavor, Spotify, and his most recent choice, Warner Music Group

The reason: “Growth in streaming, live entertainment, and advertising will boost revenue across entertainment and media during the year 22,” an analyst said in the year-ahead outlook. “Our top recommendations for the coming year are to manage increasing costs for content as well as convert (revenue growth into upside earnings).” The analyst estimates that the audio industry in the world will explode in the next decade, “driven by streaming and the return to regular live events, especially,” Swinburne selected two winners of the audio entertainment. “This creates a compelling scenario for both the owners of content audio (Warner Music) as well as distributors of the content (Spotify) and both of which will benefit from the current growth of the backdrop,” Swinburne explained.

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