- Media was exceptionally strong in 2013 (+20% vs market), driven by Europe. It should outperform again in 2014 returning to its 2008–12 drivers: gradual re-rating and above-average earnings growth driven by high margins, low capital intensity and proven ability to reshuffle asset mix.. - Three key themes to drive stock performance in 2014 : Firstly, increased selectivity in playing the European/US recovery. Secondly, greater multiples differentiation reflecting diverging long-term growth prospects. Lastly, the re-emergence of some out-of-fashion or less cyclical names. - We reduce exposure to broadcasters, favouring only higher-quality northern European names, ITV and ProSieben (upgraded). We downgrade RTL and TF1 to Neutral, now fairly valued. Our work shows that market hopes of a rapid ad recovery could prove void in France and Italy – M6 and Mediaset are downgraded to Underperform. - Top picks : Long: Publicis, Wolters Kluwer, ITV, Rightmove and JC Decaux. Avoid: Lagardère, Mediaset.
REco : *LAGARDERE CUT TO UNDERPERFORM VS NEUTRAL AT EXANE *M6 CUT TO UNDERPERFORM VS NEUTRAL AT EXANE *MEDIASET CUT TO UNDERPERFORM VS NEUTRAL AT EXANE *PROSIEBENSAT.1 RAISED TO OUTPERFORM VS NEUTRAL AT EXANE *REED ELSEVIER CUT TO NEUTRAL VS OUTPERFORM AT EXANE *RTL GROUP CUT TO NEUTRAL VS OUTPERFORM AT EXANE *UBM CUT TO NEUTRAL VS OUTPERFORM AT EXANE *WOLTERS KLUWER RAISED TO OUTPERFORM VS NEUTRAL AT EXANE