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Investing.com - Guggenheim raised its price target on Gray Television (NYSE:GTN) to $7.00 from $6.00 on Thursday, while maintaining a Buy rating on the stock. According to InvestingPro data, the company trades at attractive multiples with a P/E ratio of 3.8x and P/B of 0.28x, suggesting potential value opportunity.
The research firm updated its model following Gray Television’s second-quarter results and forward-looking guidance. Guggenheim now forecasts 2025 revenue of $3.10 billion and adjusted EBITDA of $660 million, both lower than previous estimates due to underlying industry headwinds in advertising and distribution. The company’s current EBITDA stands at $1.05 billion, with analysts projecting some pressure on profitability.
Gray Television has been actively pursuing deleveraging efforts, with Guggenheim expecting another debt reduction cycle in 2026 driven by political advertising and recently announced transactions. The company has completed several strategic deals with Scripps, SGH, BCI, and Allen Media.
These transactions are expected to close by year-end and collectively reduce Gray’s leverage by approximately 0.25x, implying they will contribute around $90 million in EBITDA. Guggenheim anticipates Gray’s management will continue seeking opportunities in the current deregulatory environment.
Guggenheim estimates Gray Television’s average annual free cash flow for the 2025/2026 cycle will be $282 million, supporting its decision to raise the price target.
In other recent news, Gray Television reported its second-quarter 2025 earnings, which showed a significant miss on earnings per share (EPS) expectations. The company posted an EPS of -$0.71, falling short of the forecasted -$0.37. However, Gray Television’s revenue slightly exceeded projections, coming in at $772 million against an expected $766.31 million. In the realm of mergers and acquisitions, Wells Fargo highlighted the benefits of these activities, citing deleveraging and free cash flow accretion, and subsequently raised its price target for Gray Television to $5.00 from $4.50. Benchmark also adjusted its outlook on Gray Television, raising the price target to $9.00 from $7.00, maintaining a Buy rating due to the company’s recent refinancing process that improved its balance sheet. Both Wells Fargo and Benchmark noted the positive impacts of these financial maneuvers on the company’s valuation. These developments reflect the ongoing strategic adjustments within Gray Television.
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