Morgan Stanley stated that its most Bullish Stocks are in the advertising Sector, and listed the preferred media and Entertainment Stocks for 2025.

Advertising and Marketing Services.

Morgan Stanley stated that the USA advertising market is expected to grow by approximately 6.1% in 2025, as the market will face a challenging base effect every four years, with the USA presidential election and the Summer Olympics occurring simultaneously in 2024. However, the research firm anticipates strong growth in US advertising spending driven by content expenditures at the bottom of the conversion funnel, selecting Meta (META.US) and Reddit (RDDT.US), which are rated as "Shareholding" in their Internet Plus-Related industry subcategory.

Morgan Stanley analyst explained: "Meta is well-positioned as it has a large range of GPU-supported products, including AI-driven Feed and video recommendation improvements, which can learn more effectively from larger datasets and incremental Diffusion model capabilities in a new ranking model architecture... On smaller advertising platforms, we believe Reddit continues to be in a favorable position, driving about 35% growth in US advertising revenue, outpacing competitors by 2-6 times."

Morgan Stanley also discussed the merger between Omnicom (OMC.US) and IPG (IPG.US), which, if the Trade is approved, would create the largest advertising company in the world by 2025. They indicated that such a large-scale potential deal "could face some regulatory scrutiny, and execution risks may arise, as both companies are service enterprises with human capital, potentially leading to integration challenges."

In addition, the research firm mentioned Roku (ROKU.US) and reiterated its "Shareholding" rating. They believe the CTV advertising market is becoming "increasingly competitive," with mid-term platform gross profit expectations facing risks and limited valuation support for the next year.

Media and Entertainment

Morgan Stanley Analysts have removed Spotify (SPOT.US) from the preferred list and selected Disney (DIS.US) as their top choice for the new year. However, both stocks maintain a "Shareholding" rating, and the Target Price has been adjusted.

In terms of streaming, they expect Disney and Warner Bros. Discovery (WBD.US) to achieve considerable streaming profits, while Paramount (PARA.US) will realize domestic streaming profits in 2025. They noted that Fox's (FOXA.US) Tubi's EBITDA is only slightly negative, and only NBC's Peacock remains in a loss.

Morgan Stanley Analysts stated: "Although the streaming Industry outlook has improved, and overall Industry consolidation potential has strengthened, we see no reason to become more optimistic." Warner Bros. Discovery and Fox have been given a "Hold" rating, while Paramount Global and AMC Entertainment (AMC.US) have been rated for "Shareholding".

Regarding theme parks in the USA, Disney and Six Flags (FUN.US) are their top choices. Morgan Stanley stated: "Disney's experience scale is unparalleled, providing significant advantages in investment growth."

Secondly, they believe that with the improvement in traditional park monetization, Six Flags is positioned to achieve accelerated revenue growth in 2025 and beyond. Since the pandemic broke out, the relative growth of traditional parks continues to lag behind Leisure parks.

For Sports Assets, considering the long-term growth of media rights, sponsorship, and live events, the research firm remains optimistic. The company expects to maintain healthy growth, especially benefiting Liberty Formula One (FWONK.US) and TKO Group (TKO.US), Madison Square Garden Sports (MSG.S.US), and the Atlanta Braves (BATRK.US) from rising team values.

In terms of box office, Morgan Stanley indicated that it has grown more confident in the comprehensive recovery of the domestic economy in the USA and favors Cinemark (CNK.US). They expect that in 2025 and 2026, the box office supply from traditional film companies and Technology film companies will increase, driving further box office recovery. They expect that by 2026, with the increase in blockbuster supply and the maintenance of small and medium-sized film supply, the film supply will recover to pre-pandemic levels.

For news-related Stocks, the research company believes that the New York Times (NYT.US) can gain some benefits from scale expansion, but its core news network's growth has slowed down, raising doubts about long-term user opportunities. The stock is rated as "Hold."