On Monday, Wells Fargo (NYSE:WFC) adjusted its price target for The E.W. Scripps Company (NASDAQ:SSP), reducing it to $4.50 from the previous $6.00, while keeping an Equal Weight rating on the stock. The adjustment follows an estimation of a decline in core advertising revenue and other factors influencing the company's financial outlook.
The Wells Fargo analyst pointed out that The E.W. Scripps Company is expected to face a 4% year-over-year decrease in core advertising revenue in the second quarter, which amounts to about $143 million. This decline is attributed primarily to a national downturn, including pressures from the sports betting sector. Despite this, local advertisement sales in the automotive and home improvement sectors are showing resilience, with a mid-single-digit year-over-year increase.
Political advertising revenue for the second quarter is estimated at $22 million. The firm has increased its 2024 political revenue forecast for The E.W. Scripps Company to $263 million, up from $239 million. This revision is based on robust spending observed in the Missouri and Ohio Senate races, as well as the Florida issue race, indicating a strong market for political advertising.
Additionally, the analyst estimates that second-quarter retransmission revenue will experience a modest increase of 0.5% year-over-year, reaching $196 million. This is partly due to the renewal of approximately 5% of subscriber contracts in the first half of the year. Looking ahead to 2024, the forecast for retransmission and net retransmission revenues is a growth of 2.3% and 2.5% year-over-year, respectively.
InvestingPro Insights
In light of the recent analysis by Wells Fargo on The E.W. Scripps Company (NASDAQ:SSP), additional insights from InvestingPro can offer a deeper understanding of the company's financial health and stock performance. The E.W. Scripps Company is currently trading at a low Price / Book multiple of 0.41, which may indicate an undervaluation of the company's assets relative to its market price. Despite the challenges outlined, the firm's stock has shown a strong return over the last month, with a 12.66% increase in price total return.
InvestingPro Tips suggest that while the company has not been profitable over the last twelve months, analysts predict that it will turn a profit this year. This could be a significant factor for investors considering the long-term potential of the stock. Additionally, the company's liquid assets exceed short-term obligations, providing a measure of financial stability in the face of market fluctuations.
With a market capitalization of approximately $307.83 million, The E.W. Scripps Company's financial data shows a revenue of $2326.6 million over the last twelve months as of Q1 2024. While the company has experienced a slight revenue decline of 3.67% during this period, the quarterly revenue growth stands at a positive 6.38%. These figures suggest a nuanced financial trajectory, with areas of both concern and optimism for investors.
To explore more detailed InvestingPro Tips, which can further inform investment decisions in The E.W. Scripps Company, visit https://www.investing.com/pro/SSP. There are an additional 11 tips available on InvestingPro. Use coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription and gain access to comprehensive investment analysis tools.
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