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On Thursday, Citi analysts revised their position on Lamar Advertising (NASDAQ:LAMR), upgrading the stock from Neutral to Buy and increasing the price target to $19.00, up from the previous $17.00. The decision comes after a reassessment of tariff risks, which were previously viewed as a concern for the advertising sector. The outdoor advertising giant, currently valued at approximately $12 billion, has demonstrated strong profitability with a 67% gross margin over the last twelve months. According to InvestingPro analysis, the company appears overvalued at current levels, though it maintains a "GOOD" overall financial health rating.
The upgrade reflects a change in perspective regarding the broader advertising industry. Earlier in the year, Citi had lowered estimates for several advertising-focused companies due to concerns about tariff impacts. However, recent developments have led to a more optimistic outlook. "Tariff Risks Moderate” was the key comment from Citi, indicating a reduction in the perceived risks that had previously influenced their cautious stance.
As part of their revised outlook, Citi analysts are not only upgrading Lamar Advertising but also adjusting their expectations for the industry. The firm is now unwinding the estimate changes made earlier this year, which had been more conservative due to the tariff concerns.
The new price target of $19.00 represents a vote of confidence in Lamar Advertising’s potential for growth. The analysts’ commentary suggests that the factors leading to the previous downgrade have been reassessed, and the conditions have improved enough to warrant a more bullish position on the stock.
Citi’s upgrade of Lamar Advertising to a Buy rating, accompanied by a raised price target, signals a positive shift in the assessment of the company’s prospects and the advertising sector’s current environment. This adjustment by Citi analysts could influence market sentiment toward Lamar Advertising as investors digest the implications of the revised ratings and targets.
In other recent news, Lamar Advertising Company announced its first-quarter 2025 earnings, reporting an earnings per share (EPS) of $1.35, surpassing analysts’ expectations of $1.31. However, the company’s revenue of $505.43 million fell short of the anticipated $509.2 million. Despite the revenue miss, the company maintained its full-year guidance for adjusted funds from operations (AFFO) and expects organic revenue growth of around 3% for the year. Lamar also declared a quarterly cash dividend of $1.55 per share, with a full-year distribution forecast of at least $6.20 per share. Additionally, Lamar completed a $150 million stock repurchase and increased its buyback program by $150 million, raising available funds for future repurchases to $250 million. The company’s digital billboard revenue grew by 4%, now accounting for 30% of total billboard revenue. Programmatic revenue also saw significant growth, increasing by nearly 30%. Lamar’s strategic focus on expansion was evident as it completed 10 mergers and acquisitions worth $22 million in the first quarter.
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