Jessica Reif Ehrlich, an analyst from Bank of America Securities, reiterated the Sell rating on iHeartMedia (IHRT – Research Report). The associated price target is $2.50.
Jessica Reif Ehrlich has issued a Sell rating for iHeartMedia based on a combination of factors that suggest the company may face challenges in the near term. She observes that the macroeconomic environment is likely to continue affecting iHeartMedia adversely, as reflected in the forecasted 7% year-over-year decline in fourth-quarter revenues. This decline is partly due to a 10% anticipated drop in broadcast advertising revenue, which is significant given that it is a major income source for the company. Despite a solid performance in digital revenue, the overall outlook remains subdued due to the broader market conditions.
Moreover, Ehrlich notes that while there is some stabilization in the advertising market, with local advertising outperforming national, the visibility into 2024 remains limited. The expectation that brands will increase advertising after a year of reduced spending may not be sufficient to drive a robust recovery for iHeartMedia. Additionally, the company’s capital structure, characterized by high debt levels of over $5 billion and significant exposure to floating interest rates, contributes to the risk profile, potentially hampering the company’s ability to generate free cash flow and deleverage effectively. These concerns underpin Ehrlich’s reiteration of the Underperform rating and a price objective of $2.50 for iHeartMedia’s stock.
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iHeartMedia (IHRT) Company Description:
iHeartMedia, Inc. engages in the provision of media and entertainment services. It operates through the following segments: Audio; Audio and Media Services; and Corporate and Other Reconciling Items. The Audio segment comprises of media and entertainment services via broadcast and digital delivery and also includes events and national syndication businesses. The Audio and Media Services segment consists of the other audio and media services, including the media representation business (Katz Media) and the provider of scheduling and broadcast software (RCS).The company was founded by L. Lowry Mays and B. J. McCombs in 1972 and is headquartered in San Antonio, TX.
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