Scripps Networks Stock Upgraded To Overweight At J.P. Morgan After Q1 Earnings Report

By Trey Williams Markets MarketWatch Pulse

Analysts at J.P. Morgan upgraded shares of Scripps Networks Interactive Inc.'s to overweight from neutral following the media networks first-quarter earnings report after the bell on Thursday. The stock was upgraded after a pullback in shares, strong commentary on advertising revenue thanks to higher demand and improving ratings at HGTV and the company's recent deal with Hulu to be included in the streaming platform's live TV service. Scripps Networks' domestic ad revenue increased 5.1% during the first quarter. Additionally, J.P. Morgan analysts expect elevated distribution revenue growth to continue with most of Scripps Networks affiliate agreements renewed. In the first quarter, domestic affiliate revenue rose 4.5%. "Scripps Networks Interactive continues to outperform most of its peers in ratings and advertising growth driven by the ongoing attractiveness of its lifestyle programming, which continues to have above-average live viewership and engagement and therefore commands high [cost per impression]," lead analyst Alexia Quadrani wrote in a note to clients. Scripps Networks reported per-share earnings of 1.53, compared with 1.37 per share in the year earlier period and above FactSet's consensus of 1.19. Revenue during the first quarter hit $855 million, up from $817 million a year ago, but shy of FactSet's $857 estimate. Shares of Scripps Network have declined 1.6% in the year to date, but are up 11.3% in the last 12 months. By comparison, the S&P 500 index is up 6.7% in the year and 16.5% in the prior 12-month period.

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