Steven Cahall, an analyst from Wells Fargo, maintained the Sell rating on Gray Television (GTN – Research Report). The associated price target was raised to $6.00.
Steven Cahall has given his Sell rating due to a combination of factors influencing Gray Television’s financial outlook. Despite a strong core advertising growth and a positive projection for political advertising revenue, the company faces several challenges. The report highlights concerns about Gray Television’s significant debt level, with a leverage ratio of 5.63x and $6 billion in debt. Cahall notes that while the company’s management shows confidence by ruling out dividend cuts and asset sales, this approach limits the opportunities for quicker debt reduction.
Furthermore, the forecast for free cash flow (FCF) is revised downwards, indicating less cash available for deleveraging. The company’s strategy to handle retransmission revenues, which includes renegotiating contracts with major networks and potentially shifting to variable expense structures, is seen as a response to headwinds but does not alleviate immediate financial pressures. The analyst’s valuation reflects a low multiple on cash flow, suggesting that the current equity value is heavily burdened by the debt load, leaving little immediate value accruing to shareholders. This, combined with the risk of refinancing needs, forms the basis for the Sell rating and the $6 price target.
According to TipRanks, Cahall is a 4-star analyst with an average return of 3.0% and a 52.44% success rate. Cahall covers the Communication Services sector, focusing on stocks such as Paramount Global Class B, Roku, and Comcast.
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Gray Television (GTN) Company Description:
Gray Television, Inc. is a television broadcasting company, which engages in owning and operating television stations and digital assets in markets throughout the United States. It operates through the following segments: Broadcasting, and Production Companies. The Broadcasting segment operates television stations located across local markets in the United States. The Production Companies segment includes the production of television and event content. The company was founded in January 1897 and is headquartered in Atlanta, GA.
