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On Friday, Guggenheim Securities adjusted its outlook on TEGNA Inc. (NYSE:TGNA), reducing the media company's price target from $22.00 to $20.00 while reaffirming a Buy rating on the shares. According to InvestingPro analysis, TEGNA currently appears undervalued, with a perfect Piotroski Score of 9 indicating strong operational efficiency. The revision reflects a more cautious assessment of the company's near-term revenue prospects due to worsening core advertising headwinds observed in March and carrying into April.
The firm's analysts have revised their first-quarter Advertising and Marketing Services ( AMS (VIE:AMS2)) revenue forecast for TEGNA to a decrease of 5.0%, a drop from the previously estimated 3.9% decline. Additionally, the total company revenue expectation has been adjusted to a 6.2% decrease, which sits at the conservative end of TEGNA's own guidance range of a 4% to 7% decline.
For the full year, Guggenheim now anticipates a 3.5% contraction in AMS revenue, a steeper decline than the 0.9% previously forecasted. Despite these challenges, the analysts highlight TEGNA's strong financial position, noting a net leverage of 2.7 times at the end of the fourth quarter. This robust balance sheet, supported by a healthy current ratio of 2.92x and an impressive Altman Z-Score of 9.71, is viewed as a strategic advantage, potentially positioning TEGNA to capitalize on deregulation opportunities should they emerge. InvestingPro data reveals the company maintains excellent financial health with an overall score of "GREAT."
In absence of significant transactions, the analysts expect TEGNA to continue prioritizing the return of capital to its shareholders. Guggenheim's model includes an estimated $175 million in share buybacks and $87 million in dividends for the year 2025.
The firm's outlook for TEGNA is also informed by press reports suggesting that the company is likely to be an acquirer of station assets. The revised price target of $20 takes into account the current challenges while still maintaining a positive long-term stance on the stock.
In other recent news, TEGNA Inc. reported its fourth-quarter earnings for 2024, showing a slight miss in earnings per share (EPS) with $1.21 compared to the forecasted $1.26. Despite this, the company's revenue increased by 20% year-over-year to $871 million, although it was below the expected $884.71 million. Full-year revenue for 2024 reached $3.1 billion, marking a 7% increase from the previous year. In another development, Moody's affirmed TEGNA's Ba3 corporate family rating and revised the outlook from negative to stable, reflecting expectations of maintaining leverage in the 3x-3.5x range. Benchmark analysts maintained a Buy rating for TEGNA with a $21.00 price target, noting optimism for potential regulatory relief and future acquisition prospects. Additionally, TEGNA appointed Melissa Zimyeski and Mat Yurow to its digital leadership team, aiming to enhance its digital strategy and audience growth. These recent developments underscore TEGNA's ongoing efforts in digital transformation and operational cost savings.
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