Citi initiated coverage on a host of UK and European media stocks on Monday as it noted it was the worst performing sub-sector in the Stoxx 600 in 2025, underperforming by around 30%.
The bank started Pearson, Publicis and Wolters Kluwer at 'buy', while Informa, Relx Group and WPP were all started at 'neutral'.
"The companies initiated on here averaged a 23% derating in 2025 while average consensus FY25E EPS growth forecasts fell 9% (-5% ex-WPP) and was largely FX driven," Citi said.
"This suggests fear, not fundamentals, were the key driver of share price performance, due to perceived risk from the AI transition. We see the de-rating as a function of the potential for long-term end-market disruption.
"With AI uncertainty likely to continue, and determining a catalyst to disprove these concerns difficult, we opt for names where the AI de-rating looks overdone and the subsequent risk/reward is attractive."
Citi set a 1,300p price target for Pearson, €109 for Publicis and €125 for Wolters Kluwer. Relx and WPP were given price targets of 3,325p and 365p.