If you have heard about or watched “The Walking Dead”, you definitely have come across the company whose options I want to explore today. AMC Networks Inc. (NASDAQ:AMCX) with a market capitalization of $5.52B owns and operates several of cable television’s brands delivering content to audiences. It operates in two segments: National Networks, which includes AMC, WE TV IFC and Sundance Channel among others and International and Other.
AMC in an Uptrend
In the year-to-date period, the shares of AMC Networks have been showing impressive bullish momentum that contrasts sharply with the performance of the stock in the previous fiscal year. For instance, the shares of AMC Networks have recorded 7 new highs and it has gained 6.23% within the last one month.
The chart above shows how the shares of AMC Networks have traded within the last one year. You will notice that the stock has been trading in a range marked by a $58 price support and a $65 resistance point from May 2014 to December 2014. You’ll also notice that that stock started an uptrend at the beginning of 2015 and the uptrend led the stock to establish a new 52-week high of $80.70 in yesterday’s session before it closed with 4.88% intraday gains at $80.02.
Another notable point about how the shares of AMC Networks are trading is that the stock’s 50-day MA of $74.60 is more than its 200-day MA of 65.20, to suggest an uptrend. The stock has an RSI of 67.87 to suggest sustained momentum on the “Buy” side. In addition, the stock seems to have established a firm support around the $75 trading price in the last one month.
Why is AMC in an Uptrend?
The strongest reason that could be proffered for the uptrend being recorded in the shares of AMC Networks is the optimistic expectations leading to the release of the company’s first quarter earnings (Q1 2015). The highlights of the first quarter earnings are presented below:
AMC Networks reported first quarter earnings of $1.66 per share to beat the consensus estimate of $1.48 and to mark a 67.67% improvement of $0.99 per share recorded in the comparable quarter of 2014
The company reported revenue of $668.68M to beat the consensus estimate of $655.66M and to mark a 27.5% year-over-year increase
How to Trade AMC Options
AMC Network has woken from the dead as its recent quarterly result marks the fourth consecutive quarter of positive EPS surprise after the company has missed estimates in the previous four quarters. Analysts are optimistic about the prospects of AMC Network in the short to medium terms because the last earnings beat has confirmed the fundamental soundness of AMC Networks’ business.
Going forward, the market expects AMC Networks to grow its revenue by 16.30% this year and by another 6.60% next year. The market expects AMC Networks’ earnings to improve 27.50% this year, climb 11.00% next year before it continues at a CAGR of 12.00% over the next 5 years. In addition, the stock has a Zacks Number 1 rank, “Strong Buy”. Analysts at Credit Agricole and CLSA have an “Outperform” rating and an $87 price target on the stock. Analysts at Piper Jaffray have an “Overweight” rating and a $90 price target on the stock.
I am optimistic about the prospects of AMC Networks and I recommend buying AMC Call options. You might want to consider buying the AMCX Jun 2015 75.000 call (AMCX150619C00075000) at an asking price of $5.60.
— Daily Option Alerts