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On Monday, Guggenheim maintained its Buy rating on Sinclair Broadcasting (NASDAQ:SBGI) but lowered the price target from $19.00 to $17.00. The adjustment follows Sinclair’s fourth-quarter 2024 earnings report and management’s guidance for the first quarter of 2025. Currently trading at $14.40 with a P/E ratio of 3.07, InvestingPro analysis suggests the stock is undervalued. Analysts at Guggenheim revised their model to account for the company’s recent financial performance and its outlook.
Sinclair Broadcasting’s management has projected revenues between $765 million and $779 million for the first quarter of 2025, with EBITDA estimates ranging from $90 million to $102 million. The company maintains strong financial health, earning a "GOOD" rating from InvestingPro, with a notable 6.94% dividend yield. Guggenheim’s own estimates are closely aligned, anticipating revenues of approximately $773 million and EBITDA of around $96 million.
The updated Guggenheim model reflects a softer core advertising trend expected in the first quarter, attributed in part to 2025 being a non-election year. Additionally, the impact of Sinclair’s latest renewal cycle on retransmission fees was taken into consideration.
Guggenheim forecasts an average annual free cash flow (FCF) of $347 million for the 2024/25 cycle for Sinclair Broadcasting, which translates to roughly $5.16 per share. This FCF yield is estimated to be around 35%, which is factored into the new price target of $17.00, down from the previous target of $19.00.
The firm’s analysis and updated price target are based on Sinclair’s recent financial results and projections for the upcoming quarter, as well as broader industry trends and the company’s specific operational circumstances. Analyst targets for the stock currently range from $12 to $30, reflecting diverse views on the company’s prospects. For deeper insights into Sinclair Broadcasting’s valuation and future potential, InvestingPro offers comprehensive analysis including 8 additional key insights and a detailed Pro Research Report.
In other recent news, Sinclair Broadcasting reported its fourth-quarter 2024 earnings, revealing a strong performance despite challenges in core advertising. The company achieved an adjusted EBITDA of $330 million, exceeding guidance by $5 million, while distribution revenue increased by 5% year-over-year. However, core advertising revenue declined by 9%, impacting overall revenue growth. Guggenheim Securities adjusted its outlook on Sinclair, lowering the price target to $17 from $19 but maintaining a Buy rating. This adjustment was influenced by Sinclair’s Q4 2024 performance and management’s projections for Q1 2025, with expected revenue between $765 million and $779 million.
Benchmark analysts also maintained a Buy rating for Sinclair, keeping the price target steady at $30. They highlighted Sinclair’s ability to exceed expectations by generating an additional $10 million in EBITDA despite higher-than-anticipated expenses. Sinclair’s recent refinancing extended its next significant debt maturity to 2029, which Benchmark noted as a strategic move that could enhance investor confidence. The company suggested potential mergers and acquisitions and the possibility of using cash from its Ventures division for stock repurchases.
Sinclair’s management has expressed optimism about potential FCC (BME:FCC) deregulation and positive core advertising growth for the full year. Looking ahead, Sinclair anticipates a 2-4% decline in media revenues for Q1 2025, with core advertising expected to be down 3%, though distribution revenues are projected to grow by 4%. These developments reflect Sinclair’s strategic focus on leveraging its scale and technology leadership to navigate the competitive media landscape.
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