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On Wednesday, JPMorgan analyst Alexia S. Quadrani adjusted the price target for Outfront Media (NYSE: NYSE:OUT), increasing it to $20.00 from the previous $19.50, while maintaining a Neutral rating on the stock. Currently trading at $18.40 with a market capitalization of $3.05 billion, the company appears slightly overvalued according to InvestingPro analysis. The adjustment followed Outfront Media’s reported fourth-quarter results, which exceeded JPMorgan’s expectations. The company’s US Media revenue and EBITDA for the quarter were $493 million and $155 million, respectively, surpassing the firm’s projections of $489 million and $151 million.
Outfront Media’s revenue growth for the quarter was 3.6%, with billboard and transit revenues growing by 2.0% and 9.1%, respectively. This growth outpaced the company’s own guidance, which had anticipated a 3% increase. The growth was attributed to a rebound in national advertising, particularly from the technology and finance sectors, which saw a 7% year-over-year increase. However, this was partially offset by a modest 1% growth in local advertising due to macroeconomic uncertainty following the election. InvestingPro data shows the company maintains a GOOD financial health score of 2.65, trading at an attractive P/E ratio of 12.9x while offering a substantial dividend yield of 6.72%.
The company noted that the positive trend in national advertising is expected to carry into the first quarter, contrasting with the "choppiness" predicted by some of Outfront Media’s peers. Billboard growth was credited to higher yields resulting from digital conversions and increased pricing, while transit growth was bolstered by successful digital conversions, particularly within the Metropolitan Transportation Authority (MTA).
Looking forward, Outfront Media has guided for "slight" revenue growth in the first quarter, with billboard revenue expected to be "flattish" and transit revenue projected to see mid-single-digit growth. The company also anticipates a roughly 1.5% revenue headwind due to the loss of a low-margin MTA billboard contract. For the year 2025, Outfront Media is aiming for mid-single-digit growth in adjusted funds from operations (AFFO), driven by improvements in operating income before depreciation and amortization (OIBDA) and a full-year capital expenditure of $85 million, of which $35 million will be allocated for maintenance.
In light of the company’s guidance, JPMorgan has slightly lowered its first-quarter revenue estimates but has increased its EBITDA forecast due to lower site lease expenses after the loss of the MTA contract. For 2025, the revenue estimates remain relatively unchanged, with a projected year-over-year increase of 2.2% (excluding Canada). However, the firm has raised its EBITDA expectations to a 4.1% increase (excluding Canada) due to anticipated higher margins. Despite these adjustments, JPMorgan’s stance on the stock remains Neutral, with the updated December 2025 price target now set at $20. For deeper insights into Outfront Media’s valuation and growth prospects, including exclusive ProTips and comprehensive financial analysis, visit InvestingPro, where you’ll find the detailed Pro Research Report covering all essential aspects of this advertising giant.
In other recent news, Outfront Media Inc. reported its fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.43, compared to the forecasted $0.38. The company also exceeded revenue projections, bringing in $493.2 million against the expected $490.81 million. This strong financial performance was supported by a 3.9% increase in organic revenues and a reduction in net leverage from 5.4x to 4.7x year-over-year. The company’s digital innovation efforts have been significant, with digital revenues now making up 36% of total revenue. Outfront Media’s sale of its Canadian business for $300 million has also contributed to this improved leverage. Analyst firms such as Citi and Morgan Stanley (NYSE:MS) have shown interest in the company’s recent performance, particularly its national advertising segment. The company anticipates continued growth, projecting mid-single-digit growth in consolidated Adjusted Funds From Operations (AFFO) for 2025. Additionally, Outfront Media expects its first-quarter 2025 revenue to show slight growth, with transit revenues anticipated to rise in the mid-single digits.
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