February 23, 2026 09:00 PM GMT US Equity Strategy | North America US Equity Strategy: Institutional 13F Positioning - 4Q25 M | US Equity Strategy North America | Morgan Stanley & Co. LLC | | | --- | --- | --- | | | Equity Strategist | | | | Nick.Lentini@morganstanley.com | | | | Bas.Jaspers@morganstanley.com | | | | Michael J Wilson | | | | Equity Strategist | | | | M.Wilson@morganstanley.com | +1 212 761-2532 | | US investors added to Healthcare and reduced exposure to | Andrew B Pauker | | | | Equity Stra ...

Core Insights - The company experienced increased stability in Q4 2025 following a period of market disruption, leading to year-on-year growth in operating profit despite customer churn and additional costs [3][4] - The financial results for 2025 were within the published guidance range, with EBITDA at the upper end, reflecting disciplined operations and strong sales momentum [4] Financial Performance - Q4 2025 revenue was ISK 7,336 million, a decrease of 1.3% compared to ISK 7,431 million in Q4 2024 [8] - EBITDA for Q4 2025 was ISK 1,916 million, down by 7.5% from the previous year, with an EBITDA margin of 26.1% [8] - EBIT increased to ISK 992 million in Q4 2025, up 5.1% from ISK 944 million in Q4 2024 [8] - Profit for Q4 2025 was ISK 620 million, compared to ISK 517 million in the same quarter of 2024, with earnings per share rising to ISK 0.26 [8] Business Developments - The company expanded its fintech operations, with corporate cards issued reaching 1,800, marking a 20% growth from Q3 to Q4 [6] - Advertising revenue in Q4 2025 was ISK 798 million, a decrease of 2.8% year-on-year, but November 2025 marked the highest month of total advertising sales in the company's history [7][8] - The company announced acquisitions of Greiðslumiðlun Íslands, Opin Kerfi, and Öryggismiðstöð Íslands, aiming to unlock synergies and enhance growth [9] Strategic Initiatives - The company is implementing a revised structure, transferring telecommunications and media operations into a new subsidiary named Ásar, focusing on disciplined growth and robust digital services [11] - The company celebrated its 120th anniversary, emphasizing its long-standing commitment to building secure telecommunications infrastructure [10]

Core Insights - Comcast reported fourth-quarter 2025 adjusted EPS of 84 cents, beating the Zacks Consensus Estimate by 12% but declining 12.4% year over year [2] - Revenues reached $32.31 billion, exceeding consensus by 0.53% and increasing 1.2% year over year [2] - Free cash flow for the quarter was $4.4 billion, up 34% from the prior year [2] Theme Parks and Peacock Performance - Theme Parks revenue surged 21.9% to $2.89 billion, exceeding estimates by 2.33%, with adjusted EBITDA climbing 23.5% year over year [3] - The opening of Epic Universe in May 2025 significantly boosted hotel rates by 20% and occupancy by 3% [3] - Peacock's revenues rose 23% to a record $7.6 billion, surpassing estimates by 3.9%, with paid subscribers reaching 44 million, adding 3 million during the quarter [4] Broadband and Video Challenges - Comcast faced net losses of 181,000 domestic broadband customers, with revenues slipping 1.1% to $6.32 billion [5] - Video revenues declined 5.6% to $6.36 billion, with a loss of 245,000 video customers, although this beat estimates by 32% [6] - Advertising revenues fell 10.8% to $1.03 billion, primarily due to the absence of political advertising [6] Studios and Content Performance - Studios revenues contracted 7.4% to $3.03 billion, missing estimates by 9%, with adjusted EBITDA tumbling 38.4% to $351 million [7] - Media adjusted EBITDA swung to a loss of $122 million from a profit of $298 million in the prior year, largely due to NBA rights costs [7] Connectivity and Platforms - Connectivity & Platforms adjusted EBITDA declined 4.3% to $7.5 billion, with margin compression of 120 basis points to 37.1%, missing estimates by 0.11% [8] Overall Assessment - Comcast's performance was driven by strong results from Theme Parks and Peacock, but faced pressures from broadband subscriber losses, weaker Studios performance, and margin compression [9]

4 th Quarter and Full Year 2025 Results J a n u a r y 2 9 , 2 0 2 6 IMPORTANT INFORMATION Caution Concerning Forward-looking Statements This presentation includes statements that may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are not historical facts or statements of current conditions, but instead represent onl ...

Core Viewpoint - The major market experienced a net outflow of 48.602 billion yuan in principal funds as of January 16, with significant withdrawals from various sectors [1]. Group 1: Sector Performance - The top ten sectors with the largest net outflows include: - Internet Services: -2.89% with a net outflow of 14.738 billion yuan [2] - Software Development: -2.29% with a net outflow of 9.073 billion yuan [2] - Cultural Media: -4.48% with a net outflow of 6.488 billion yuan [2] - Non-ferrous Metals: -0.47% with a net outflow of 5.372 billion yuan [2] - Communication Equipment: -0.2% with a net outflow of 4.046 billion yuan [2] - Aerospace: -1.22% with a net outflow of 3.629 billion yuan [2] - Power Grid Equipment: +1.8% with a net outflow of 3.587 billion yuan [3] - Energy Metals: -2.96% with a net outflow of 2.991 billion yuan [3] - Batteries: -0.37% with a net outflow of 2.472 billion yuan [3] - Medical Services: -2.89% with a net outflow of 2.371 billion yuan [3] Group 2: Notable Companies - The companies with the largest net outflows in their respective sectors include: - State Grid Information Communication in Internet Services [2] - iFlytek in Software Development [2] - Wanrun Technology in Cultural Media [2] - Chuangjiang New Materials in Non-ferrous Metals [2] - Tianfu Communication in Communication Equipment [2] - Guangqi Technology in Aerospace [2] - Siyuan Electric in Power Grid Equipment [3] - Greenme in Energy Metals [3] - Enjie in Batteries [3] - WuXi AppTec in Medical Services [3]

Group 1 - Netflix Inc. (NASDAQ:NFLX) is viewed positively by hedge funds, with analysts expressing optimism about its stock performance [1][2] - James Heaney of Jefferies has a Buy rating on Netflix with a target price of $134, indicating an expected upside of nearly 48% from current levels [1] - Peter Supino of Wolfe Research also maintains a Buy rating, lowering his price target from $139 to $121, which still suggests a 33% upside potential [3] Group 2 - Heaney believes that the market has not fully accounted for the synergies from a potential acquisition of Warner Bros. Discovery (WBD) [2] - The company is recognized for its subscription-based model, streaming a wide range of content and utilizing advanced algorithms for personalization [4]

Market Performance - The U.S. stock market was closed on December 25, 2025, for Christmas Day, with trading on both the NYSE and Nasdaq suspended for the entire day [1] - On December 24, 2025, the Dow Jones Industrial Average rose by 288.75 points (0.5961%) to reach a new record high of 48,731.16 during a shortened trading session [1] Economic Indicators - A strong U.S. GDP report indicated an annualized growth rate of 4.3% in Q3, significantly exceeding expectations and marking the fastest expansion in two years [2] - The market is experiencing a "Santa Claus rally," where stocks typically rise during the final trading days of December and the early days of the new year [2] - Optimism regarding the potential of Artificial Intelligence (AI) to enhance corporate profits is contributing to positive market sentiment [2] - Expectations of interest rate cuts by the Federal Reserve in 2026 are also influencing investor confidence [2] Company-Specific Movements - Nike (NKE) was the biggest gainer among Dow-related stocks, increasing by 4.64% following news that Apple CEO Tim Cook doubled his stake in the company [3] - Other notable gainers included Merck (MRK), which rose by 1.34%, and Disney (DIS), which increased by 1.11% [3] - Nvidia (NVDA) was the biggest decliner, down by 0.61%, followed by Cisco (CSCO) with a slight dip of 0.18%, and Honeywell (HON) edging down by 0.06% [3]

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **US Equity Strategy** and provides insights into various sectors and industry groups, particularly for Q1 2026. The analysis is conducted by **Citi Research**, a division of Citigroup Global Markets Inc. Sector Recommendations - **Overweight Sectors**: - Health Care [4] - Financials [4] - Information Technology [4] - **Market Weight Sectors**: - Utilities [4] - Industrials [4] - Energy [4] - Real Estate [4] - Communication Services [4] - Media & Entertainment [4] - Telecommunications Services [4] - Consumer Durables & Apparel [4] - Consumer Services [4] - Transportation [4] - **Underweight Sectors**: - Consumer Discretionary [4] - Consumer Staples [4] - Automobiles & Components [4] - Food Beverage & Tobacco [4] - Household & Personal Products [4] Key Insights - **Balanced Approach**: The strategy emphasizes a balanced approach to Growth, Cyclicals, and Defensives, with a focus on sectors that show persistence or signs of inflecting growth [5] - **AI Influence**: The report highlights the increasing focus on AI adopters/users, particularly within the Information Technology sector, which remains overweight due to Semiconductors and Software [7] - **Cyclical Definition**: Financials are viewed as a key cyclical sector, driven by solid fundamentals and attractive growth setups [8] - **Defensive Cohort**: Health Care is upgraded to overweight due to reduced policy uncertainty, while Utilities are lowered to market weight due to traditional rate sensitivity [9] - **Consumer Discretionary Concerns**: The sector is underweight due to reliance on major players like AMZN and TSLA, with concerns over consumer conditions and delayed tariff impacts [18] Performance Metrics - **SIGN Portfolio Performance**: The SIGN recommendations led to a relative performance of 430 basis points above the S&P 500 year-to-date [14] - **Sector Weight Recommendations**: The report provides detailed weight recommendations for various sectors and industry groups, indicating a strategic shift towards sectors with better growth prospects [23] Valuation Insights - **Valuation Metrics**: The report discusses valuation metrics for various sectors, indicating that while traditional metrics are high, the valuation composite for Media & Entertainment is more constructive [52] - **Telecommunications Services**: This sector is noted for its attractive valuation setup despite uninspiring fundamentals [33] Sentiment and Trading - **Positive Sentiment**: There are positive revisions for EPS and sales in the Media & Entertainment sector, with more insiders buying than selling [54] - **Trading Dynamics**: The report notes strong relative price momentum in the Media & Entertainment sector, although short interest is starting to increase [66] Conclusion - The report outlines a strategic shift towards a more balanced investment approach across sectors, with a focus on growth, cyclical, and defensive sectors. The emphasis on AI and the performance of major companies in the Consumer Discretionary sector are critical factors influencing investment decisions moving into Q1 2026.

Core Insights - Wall Street banks are positioned to benefit significantly from Warner Bros. Discovery's (WBD) potential sale to either Netflix or Paramount Skydance, with a total of $225 million in fees expected to be paid to advisors if a deal is finalized [1][2]. Group 1: Deal Dynamics - WBD is currently evaluating competing offers from Netflix, which aims to acquire its studio and streaming business, and Paramount, which has made a bid for the entire company, including cable TV channels [2]. - WBD's board has expressed continued support for Netflix's offer following a hostile bid from Paramount [2]. - The advisory firms involved in the bidding process have played a crucial role in board meetings, negotiations, and evaluations of the offers [2][7]. Group 2: Advisory Fees - The fee structure for the advisory firms includes significant contingent payments, with Allen & Co. and J.P. Morgan each set to receive $85 million, of which $45 million and $50 million, respectively, are contingent on a successful deal [11]. - Evercore is expected to receive $55 million, also contingent on the deal's completion [11]. Group 3: Market Context - The investment banking sector has seen a surge in activity, particularly in media and telecom mergers and acquisitions (M&A), with a reported 61% increase in deal value from the second half of 2024 to the second half of 2025, excluding the WBD sale [9]. - PwC anticipates that robust M&A activity will persist in the coming years as investors seek value in content libraries, video games, and sports assets [10].

Group 1: Stock Performances - EchoStar Corporation (NASDAQ:SATS) gained 24.70% after Morgan Stanley upgraded the stock from Equal-Weight to Overweight and raised its price target from $82 to $110 [1] - Rocket Lab Corporation (NASDAQ:RKLB) rose 22.78% due to advancing a South Korean Earth-imaging mission into its next available launch window [2] - Pan American Silver Corp. (PAAS) increased 11.18% amid higher trading of precious metal companies, driven by investor optimism of a Fed rate cut [3] - Core & Main, Inc. (NYSE:CNM) gained 11.19% after reporting better-than-expected Q3 adjusted EPS, with multiple analysts raising their price forecast [3] - Flex Ltd. (NASDAQ:FLEX) increased 4.70% after Goldman Sachs maintained a Buy rating and raised its price forecast from $67 to $74 [4] Group 2: Acquisitions and Analyst Upgrades - Confluent, Inc. (NASDAQ:CFLT) increased 0.64% following IBM's agreement to acquire the company for $31 per share, with multiple analysts raising their price forecast [1][2] - Carvana Co. (NYSE:CVNA) rose 5.35% after announcing it will join the S&P 500 on December 22, 2025, along with multiple analysts raising their price forecast [2]