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On Wednesday, Benchmark analyst Daniel Kurnos increased the price target for The E.W. Scripps Company (NASDAQ:SSP) to $8.00 from the previous target of $7.00, while reiterating a Buy rating on the stock. This adjustment came after the company’s shares experienced a significant surge, closing nearly 45% higher on Tuesday, following the announcement of a better-than-expected refinancing deal the evening prior to their earnings call. According to InvestingPro data, the stock is currently trading at $2.61, with analyst targets ranging from $2.80 to $10.00, suggesting significant potential upside. The company appears undervalued, trading at just 0.13 times book value.
The sharp rise in Scripps’ stock value is not solely attributed to the refinancing news. Analysts believe that the additional increase in the company’s shares was fueled by the anticipation of potential deregulation by the Federal Communications Commission ( FCC (BME:FCC)). On Tuesday, FCC Chairman Carr proposed a sweeping new initiative known as "In Re: Delete, Delete, Delete," aimed at eliminating unnecessary regulations, which could benefit local broadcasters like Scripps. The company’s financial health appears solid, with a current ratio of 1.31 indicating sufficient liquidity to meet short-term obligations.
The local broadcasting sector is optimistic about the possibility of a more relaxed regulatory environment under the current FCC and Congress, which is expected to last for at least the next two years. This optimism is supported by the belief that there may be a unique opportunity to significantly alter the landscape for local broadcasters, with Scripps being one of the potential beneficiaries.
There are various strategic options that Scripps might explore, including asset swaps, mergers, or even a sale, to realize the company’s value. Despite the challenges in envisioning the Scripps family as sellers, the company’s stock, trading around $2 per share, is considered to have significant potential.
In addition to the regulatory developments, Scripps’ own efforts should not be underestimated. The company’s fourth-quarter earnings surpassed consensus estimates, and despite a slow start to 2025, their cost-saving initiatives and the potential growth trajectory for their ION network seem to be progressing ahead of schedule. With annual revenue of $2.51 billion and EBITDA of $583 million, the company maintains a strong market position. InvestingPro subscribers can access additional insights, including 8 more ProTips and a comprehensive analysis of Scripps’ financial health and growth potential through the exclusive Pro Research Report, available for over 1,400 US stocks.
In other recent news, E.W. Scripps Company reported its fourth-quarter 2024 earnings, revealing an earnings per share (EPS) of $0.92, which fell short of the forecasted $1.01. However, the company exceeded revenue expectations, posting $728.38 million against a forecast of $719.96 million, largely due to record political advertising revenue. The company has also made strides in financial stability by reducing its total debt to $2.6 billion, with improvements in its leverage ratio. In terms of analyst activity, there were no specific upgrades or downgrades noted in the recent reports. The company is focusing on growth in connected TV revenue and women’s sports programming, projecting a growth of over 30% in connected TV revenue in the first quarter of 2025. E.W. Scripps has also been engaged in significant debt refinancing efforts, extending the maturity of up to $1.5 billion of debt. Additionally, the company is working to capitalize on regulatory changes that could potentially allow for greater consolidation in the local broadcast television market.
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