Morgan Stanley has identified its top picks in the advertising sector and outlined preferred media and entertainment stocks for 2025. The U.S. advertising market is expected to grow by 6.1%, driven by the 2024 presidential election and Summer Olympics. Morgan Stanley favors Meta (META, Financial) and Reddit (RDDT), both rated as "overweight" due to strong growth potential in the ad space.
The firm also discussed the potential merger of Omnicom (OMC) and IPG (IPG), which could create the world's largest advertising company by 2025, though it may face regulatory scrutiny and integration challenges.
In media, Disney (DIS) is highlighted as a top pick for the new year, while Spotify (SPOT) was removed from the list. Streaming profits are expected for Disney and Warner Bros. Discovery (WBD), with Paramount (PARA) projected to achieve domestic streaming profitability by 2025.
Disney and Six Flags (FUN) are preferred in the theme park sector, while Liberty Formula One (FWONK) and TKO Group (TKO) are highlighted in sports assets. In cinema, Cinemark (CNK) is favored for its potential in box office recovery.