LIVE MARKETS-European media: fear vs. fundamentals

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EUROPEAN MEDIA: FEAR VS. FUNDAMENTALS

European media stocks .SXMP had a pretty torrid 2025, with the sector falling 15% versus a near 20% rise for the STOXX 600 .STOXX.

Citigroup has a new note on the sector, initiating Informa INF.L, Relx REL.L and WPP WPP.L at 'neutral', and Pearson PSON.L, Publicis PUBP.PA and Wolters Kluwer WLSNc.AS at 'buy'.

Those six stocks de-rated, or traded at a lower valuation multiple, by an average of 23% last year, yet consensus earnings growth forecasts only fell by 9%.

"This suggests fear, not fundamentals, were the key driver of share price performance, due to perceived risk from the AI transition," says Ciaran Donnelly, Citi's head of European media research.

"We see the de-rating as a function of the potential for long-term end-market disruption."

Reprinted with permission of Citi Research. Not to be reproduced.

Citi believes the AI uncertainty is likely to continue for the sector, but expects further de-rating to be relatively limited from here, with multiples stabilising or even unwinding in some cases.

"Identifying catalysts for the reversal is the difficulty, but we think a likely scenario is where high quality companies have de-rated significantly and continue to deliver operationally," Donnelly says.

"These stocks present the most attractive risk/reward."

(Samuel Indyk)

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