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On Tuesday, Goldman Sachs maintained a Neutral rating on iHeartMedia (NASDAQ:IHRT) stock, while increasing the price target to $1.25, up from the previous $1.00, following the company’s first-quarter earnings that surpassed expectations in terms of revenue and Adjusted EBITDA. Currently trading at $1.23, the stock has shown remarkable resilience with an 18% gain over the past week, despite operating with a significant debt burden of $5.8 billion. The financial institution highlighted the company’s strong performance in podcasting revenues, which are anticipated to grow in the low-20s percentage range in the second quarter of 2025, exceeding the mid-teens year-over-year growth projected by consensus.According to InvestingPro analysis, iHeartMedia’s current market position reflects a company at Fair Value, with 8 additional key insights available to subscribers through the comprehensive Pro Research Report.
Despite the favorable results, Goldman Sachs noted several challenges faced by iHeartMedia. The mixed advertising market trends, particularly among small and medium-sized business advertisers, have led to a 2% decline in ad trends for April, including political advertising. The company’s financial health score from InvestingPro is rated as "FAIR," with revenue of $3.86 billion in the last twelve months showing modest growth of 3.3%. Additionally, there is reduced certainty about the company’s ability to meet its financial guidance for the year without some improvement in the macroeconomic environment. The second-quarter guidance for Revenue and Adjusted EBITDA was also reported to be below consensus expectations.
In light of these developments, Goldman Sachs has slightly reduced its 2025 revenue and Adjusted EBITDA projections by approximately 1% to account for the weaker-than-expected second-quarter guidance. This revision is a result of the increased macroeconomic pressures on the advertising market. The firm now forecasts a 2025 Adjusted EBITDA of $680 million, which represents an 18.0% margin, and a Free Cash Flow of approximately $156 million, translating to around a 23% Adjusted EBITDA to Free Cash Flow conversion.
The report from Goldman Sachs underscores the mixed outcomes for iHeartMedia, with notable achievements in the podcasting segment being offset by broader advertising market challenges. The updated price target reflects the firm’s assessment of these factors as the company navigates through the current fiscal year.
In other recent news, iHeartMedia Inc. reported a 1% year-over-year increase in revenue for the first quarter of 2025, reaching $807.1 million, which exceeded the analyst forecast of $789.96 million. The company’s adjusted EBITDA remained stable at $105 million, while net debt stood at approximately $4.6 billion. iHeartMedia experienced growth in its digital and podcast segments, with podcast revenue rising by 28% and non-podcast digital revenues increasing by 8.7%. Despite these gains, the company faces challenges in traditional advertising sectors, with declines noted in categories such as restaurants, auto, and gambling. Analysts from firms like Goldman Sachs and JPMorgan have shown interest in iHeartMedia’s ability to navigate the uncertain advertising market and maintain ad revenue growth. iHeartMedia’s guidance for the second quarter of 2025 anticipates adjusted EBITDA between $140 million and $160 million, with consolidated revenue expected to decrease by low single digits. The company attributes this outlook to macroeconomic uncertainties and a slight decline in April pacing.
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