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On Monday, Benchmark analyst Daniel Kurnos adjusted the price target for Nexstar Broadcasting Group (NASDAQ: NXST) shares, reducing it to $200 from the previous $215. Despite the price target cut, the analyst maintained a Buy rating on the company’s stock. Currently trading at $149.56, Nexstar shows signs of undervaluation according to InvestingPro analysis, with a P/E ratio of just 8.5x. Kurnos highlighted Nexstar’s advantageous position to benefit from potential regulatory changes and noted the company’s renewal of two-thirds of their CW retransmission agreements this year as a positive factor. The renewed agreements, coupled with an increasing sports slate, are expected to positively affect core advertising revenue.
Kurnos also pointed out that while there is optimistic chatter about Nexstar’s prospects, there are considerations to be made regarding timing. The company’s strong dividend history, having raised payouts for 12 consecutive years with a current yield of 5%, provides some comfort to investors during this period. Advertising has had a slow start at the beginning of the year, and the company faces minimal major network renewals in the near term. Additionally, higher sports rights costs could lead to another loss for the CW network this year, despite the anticipated ramp-up in advertising and retransmission revenue.
The analyst’s commentary suggests that while Nexstar is poised to take advantage of certain opportunities, challenges such as the timing of rate increases and elevated sports rights costs could impact its financial performance. Moreover, Kurnos indicated that consensus estimates have been declining recently and revealed Benchmark’s own forecast for 2025, which is below consensus. The firm expects that gross retransmission revenue could be compressed this year, depending on the decline in subscribers.
In conclusion, while maintaining a positive outlook on Nexstar, Benchmark’s revised price target reflects a cautious approach due to several factors that could affect the company’s performance in the short term. The analyst’s comments provide insight into the balance of potential growth catalysts against the headwinds Nexstar may face throughout the year.
In other recent news, Nexstar Media Group (NASDAQ:NXST) announced a 10% increase in its quarterly cash dividend, marking the twelfth consecutive year of dividend growth. This increase, applicable from the first quarter of 2025, reflects Nexstar’s strong financial performance and commitment to shareholder value, as highlighted by the company’s CEO, Perry Sook. In another development, Nexstar has renewed its NBC Television Network affiliations for 33 stations across the U.S., ensuring continued access to NBC content for over 14 million households. This multi-year agreement reinforces Nexstar’s significant role in local television broadcasting. Additionally, Ric Harris has been appointed as the new Vice President and General Manager for Nexstar’s Chicago operations, including WGN-TV. Harris brings over 25 years of broadcast management experience, succeeding Paul Rennie following his retirement. These strategic moves are part of Nexstar’s ongoing efforts to strengthen its operations and expand its media footprint.
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