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On Monday, Citi analyst Catherine T O’Neill increased the price target for Schibsted ASA (SCHA:NO) (OTC: SBBTF) shares to NOK 380 from NOK 355, while the firm continues to hold a Neutral rating on the stock. The adjustment follows Schibsted’s recent third-quarter results and Capital Markets Day presentations, where the company revised its revenue forecasts for fiscal years 2023 and 2024.
Schibsted announced plans to divest most of its Growth and Investments segment, leading Citi to eliminate this segment from their financial model. Additionally, Schibsted aims to exit its Jobs operations outside of Norway, which O’Neill believes will result in a more streamlined organization with improved margins. Consequently, Citi has reduced their revenue and EBITDA estimates for fiscal year 2025 by 18% and 13%, respectively.
Despite these cuts, Citi has revised its forecasts for fiscal year 2026 upwards, with a 1% increase in revenue and a 9% rise in EBITDA when looking at like-for-like figures, excluding the Growth & Investments segment. This positive adjustment is attributed to Schibsted’s efforts to enhance operating leverage.
The company’s Transition Service Agreement (TSA) with News Media is set to conclude in 2025, which O’Neill suggests could lead to additional cost savings in the years 2026 and 2027. Citi’s new price target is based on a blend of discounted cash flow (DCF) analysis, assuming a long-term growth rate of 3% and a weighted average cost of capital (WACC) of 6.8%, alongside a sum-of-the-parts (SOTP) valuation.
The reiteration of the Neutral rating indicates Citi’s stance that while the company is expected to have a more favorable cost structure in the future, the current valuation is balanced with the potential risks and rewards.
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