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Investing.com - Morgan Stanley (NYSE:MS) upgraded oOh!media (ASX:OML) from Equalweight to Overweight and raised its price target to AUD2.00 from AUD1.70 following the company’s 1H CY25 results.
The upgrade comes despite OML shares falling 10% after the company released its first-half results and outlook, which fell below consensus expectations. Morgan Stanley views the current share weakness as a buying opportunity.
The firm notes several positive factors, including reduced contract renewal risks for the next 1-2 years. While OML lost its Auckland City Council contract, Morgan Stanley believes this loss is now reflected in the share price but not yet in consensus earnings estimates.
Morgan Stanley expects the advertising market to improve in 4Q CY25 following anticipated Reserve Bank of Australia interest rate cuts, which should stimulate higher advertising spending in 4Q CY25 and 1H CY26.
The company’s financial position has strengthened with net debt falling to A$105 million, representing 0.7x EBITDA (down from 0.8x), while its debt facility was renegotiated at lower rates. OML also increased its first-half dividend by 29% to 2.25 cents, equating to a 4% fully franked dividend yield.
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