Yahoo Finance Corus Entertainment stock plunges over 20% to new 52-week low
Corus Entertainment (CJR-B.TO) shares sank to a new 52-week low on Tuesday as analysts predict the loss of content from Warner Brothers Discovery could cost the Canadian media company over $150 million in lost revenue next year.
Last week, Toronto-based Corus announced that some of its programming and trademark arrangements with Warner Brothers Discovery will not be renewed in 2025. The change will mainly impact five of the company’s channels, including HGTV Canada, Food Network Canada, Magnolia Network, Oprah Winfrey Network, and Cooking Channel Canada. Corus channels Adult Swim, Cartoon Network, and Boomerang also broadcast content from Warner Brothers Discovery.
On Monday, larger rival Rogers Communications (RCI-B.TO) announced multi-year deals with NBCUniversal and Warner Brothers Discovery. In 2025, Rogers plans to carry Warner Brothers Discovery’s English-language lifestyle and factual content on its network.
Toronto-listed Corus shares fell as much as 21.7 per cent in early trading on Tuesday, setting a fresh 52-week low for the battered stock, which has dropped nearly 75 per cent in the last 12 months.
CIBC Capital Markets analyst Scott Fletcher downgraded Corus shares to “underperformer” from “neutral,” while slashing his price target from $0.85 per share to $0.25. He estimates the programming Corus is set to lose could result in as much as $150 million in lost revenue next year, and $40 million in lost profit.
Corus generated $1.51 billion in annual revenue in the fiscal year 2023, and an adjusted profit of $334 million.
“With Corus already facing the pressure of a declining advertising market, the additional hit to revenue calls Corus’ financial future further into question,” Fletcher wrote in a note to clients.
Drew McReynolds at RBC Capital Markets also lowered his price target from $1.25 per share to $0.50, while maintaining a “sector perform” rating.
“We have decreased our target multiples to reflect the higher risk profile associated with the step-back in earnings visibility against the backdrop of a still sluggish television advertising market and elevated leverage,” he noted in a report.
Citing Canadian Radio-television and Telecommunications Commission specialty channel data, McReynolds says the five Corus channels impacted by the loss of Warner Brothers Discovery content generated about $155 million in regulated revenue in 2022.
Pressure on Canada’s telecom sector has risen in recent months due to the impact of higher interest rates on consumers and heightened competition. Shares of Rogers and Bell Canada owner BCE (BCE.TO) have fallen significantly since early 2024.
For CIBC Capital Markets analyst Stephanie Price, that’s created a buying opportunity for the latter company. In a note to clients last month, she said concerns about competition, interest rates and free cash flow growth have been priced into the stock. That prompted a rating boost from “neutral” to “outperformer,” with a $52 per share price target.
“While we acknowledge the difficult competitive environment and the role of rates in telecom valuations, BCE appears attractive at current levels relative to the group," Price wrote on April 22.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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