Wedbush Morning Call - Feb 13 2020 7:01AM

FTC Move Opens Up a New Chapter in the Big Tech vs. Beltway MMA Match

Good Q4, PT to $51 reflecting latest DIS offer

A solid set of numbers that reinforces the value of the assets going to Disney. Management comments also highlight how new Fox will be very much focused on sports and news, a much lower risk segment of media in our view. Despite the existing Fox Q4 beat, we are lowering our new Fox FY19 EPS from $0.95 to $0.83 on lower TV forecasts but our FY20 EPS just comes down $0.02 to $1.01. We are lifting our existing Fox PT from $48 to $51 reflecting Disney's $38 offer plus a $13 target for new Fox. As we see the deal closing at around the year end, this is a year-end price target.

Model update

This report contains forecasts updated for reported Q218 results. Neither our financial nor PSU estimates are materially changed and we remain Overweight with a 12m PT of $365.

V/MA: strong core, adjacencies more competitive

V/MA remain core long term holdings with secular cash to card tailwinds driving strong growth long term, supported by developments such as contactless. Valuation remains reasonable, although newer growth areas such as B2B face greater competition. We remain Overweight V/MA, raise our price targets to $173 and $250 respectively and currently favour V which trades on a PE of 28x, three turns lower than MA.

Banks: Trading update and 3Q18 preview

Market volatility has moderated significantly since the beginning of the year, ceasing to be a tailwind for the banks' trading revenues in 3Q18. Despite the strong IB pipelines (announced M&A is up 40% YTD), fee pools have been affected by timing issues and are down 15-20% across the industry for the current quarter. Medium term, the outlook remains positive thanks to improving GDP growth, benign credit conditions, rising interest rates and a deregulatory focus. We have lowered our 3Q18 EPS estimates by 3% on average. Our longer term forecasts decline only modestly by 1%. C remains our t...