AMC Networks (NASDAQ:AMCX) was cut to Underweight from Equal-Weight at Morgan Stanley on Tuesday, with analysts lowering the firm's price target on the stock to $12 from $19 per share.
The analysts explained they are downgrading the stock based on its exposure to legacy headwinds.
"We downgrade AMCX from an Equal-weight to Underweight rating based on its exposure to the rising macro challenges and see greater risks of downward estimate revisions below consensus expectations," they said.
"We lower our adj. EBITDA over the next three years to reflect a down 10% CAGR through '25E (vs. -5% previously), driven by cord-cutting pressures and slowing streaming growth."
They believe rising cord-cutting drives outsized pressure on AMC Networks' sub-scale TV networks.
"As the industry cord-cutting trends continue to worsen, we see greater downside risks on the revenue outlook across both linear affiliate fees and linear advertising. This is true for the broader industry, but on a relative basis, AMC's lower scale puts greater pressure on these revenue sources as the ability to drive pricing power is more limited in our view," the analysts added.
Despite the downgrade, AMCX shares are up over 1.5% at the time of writing on Tuesday.