In a report released yesterday, Steven Cahall from Wells Fargo assigned a Hold rating on iHeartMedia (IHRT – Research Report), with a price target of $2.50.
Steven Cahall’s rating is based on a careful assessment of iHeartMedia’s financial performance and market conditions. Although iHeartMedia recorded a revenue that was slightly ahead of both the company’s and analysts’ predictions for the fourth quarter, it fell short in terms of adjusted EBITDA, only narrowly meeting the lower end of the guidance range. The company’s guidance for the first quarter also suggests a conservative outlook, with revenue projections that do not meet analysts’ expectations, and adjusted EBITDA guidance that, while aligned with estimates, does not indicate a robust upside. These factors contribute to a cautious view of the stock’s near-term growth potential.
The high leverage ratio of the company, with net debt to EBITDA standing at 7x, is a significant point of concern for Cahall. While iHeartMedia has expressed a commitment to reducing its leverage over the long term, the immediate financial picture is complicated by upcoming debt maturities and the need for refinancing. Although the company is expected to generate a decent free cash flow relative to its equity value, this may not be sufficient to alleviate refinancing risks. The potential for these risks to impact the stock’s performance is a key reason for the Hold rating, as the path to achieving the desired deleveraging remains uncertain.
In another report released yesterday, Goldman Sachs also maintained a Hold rating on the stock with a $2.00 price target.
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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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