Jefferies 'positive' on interactive entertainment despite possible recession

Funko

12/01/2023 15:36

(Updates)
    ** Looking into 2023, Jefferies has "mixed views" on
interactive media & toy sector but is "generally positive"
despite a "potential recession looming"
    ** Shares of Netflix Inc  NFLX.O  up about 0.5% at $328.96
    ** The broker upgrades entertainment services company
Netflix  NFLX.O  to "buy" from "hold", as ad-based video on
demand and password sharing changes will result in a lower churn
rate and a return to consistent double digit subscription growth
    ** In the music sector, which it deems a "defensive
industry", it forecasts a 4% growth rate in 2023
    ** However, the brokerage downgrades music streaming
provider Spotify  SPOT.N  to "hold" from "buy", saying the
convergence of products like music, podcast, audiobooks and 
fandom "is happening, but much slower than expected"
    ** Gross margin return will not return to 2021 level until
2024, it adds
    ** Brokerage expects a growth rate of -2% in 2022 and -5% in
2023 for the toy industry
    ** It upgrades toy-makers Jakks Pacific  JAKK.O  to "buy"
from "hold", pointing to strict cost control and deleveraging,
while it downgrades pop culture consumer products Funko  FNKO.O 
to "hold" from "buy"
    ** It also cuts TV streaming and advertisement platform Roku
 ROKU.O  and digital content platform Unity  U.N  to
"underperform" from "hold"
 (Reporting by Alberto Chiumento)
 ((alberto.chiumento@thomsonreuters.com))