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UBS upgraded oOh!media (ASX:OML) from Neutral to Buy on Tuesday, raising its price target to AUD2.00 from AUD1.65. The upgrade reflects UBS’s confidence in the outdoor advertising company’s stabilizing market share and growth potential.
The firm projects a three-year earnings per share compound annual growth rate of 15% from 2024 to 2027, while the stock trades at 13 times earnings. UBS considers this valuation attractive compared to the broader ASX Small Ordinaries index, which trades at 22 times earnings with only 8% EPS growth.
A key catalyst for the rating change is oOh!media’s market share stabilization year-to-date. Despite losing approximately 600 basis points of market share in 2024, the company’s revenue growth has been at least in line with the market through the March and June quarters.
The out-of-home advertising sector shows strong momentum, with spending up 15% year-over-year in the five months to May. UBS expects this trend to continue, projecting high single-digit to low double-digit growth for calendar year 2025, translating to approximately 9% top-line revenue growth for oOh!media.
UBS increased its target EV/Cash EBITDA multiple to 12x from 10x, citing oOh!media’s operating leverage and recent cost-cutting benefits that should drive 20% EPS growth and 18% free cash flow per share growth in calendar year 2025.
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