Boston Omaha stock target cut, holds rating on higher capital cost

On Wednesday, TD Cowen made adjustments to its outlook on shares of Boston Omaha Corporation (NYSE:BOC), reducing the price target to $28 from the previous $30 while continuing to endorse the stock with a Buy rating.

The firm's decision comes in the wake of Boston Omaha's second-quarter results for 2024, which, according to the analyst, have laid a robust foundation for the company's future growth. The analyst highlighted the company's strong position, noting its zero parent-level debt and the availability of investable funds. These factors are expected to enable Boston Omaha to strategically expand through acquisitions in the Out-of-Home sector and investments in Broadband.

Despite the positive outlook on the company's operational potential, the adjustment in the price target to $28 reflects concerns over an increased cost of capital. The analyst believes that while the company is poised for growth in the second half of 2024 and beyond, the financial environment necessitates a more conservative valuation.

Boston Omaha's current standing, with no debt at the parent level, presents it with the opportunity to invest and grow. The firm anticipates that the company will make use of this advantage to undertake accretive acquisitions and investments that will contribute to its expansion.

The decision to maintain a Buy rating indicates confidence in Boston Omaha's strategy and future performance despite the revised price target. This suggests that TD Cowen sees the recent quarter's results as a stepping stone for the company's endeavors in the latter part of the year and looking ahead.

In other recent news, Boston Omaha Corporation has announced a share repurchase program, authorizing the repurchase of up to $20 million of its Class A common stock through September 30, 2025. The program is set to commence following the company's second-quarter earnings report in 2024. The company's Chairman and CEO, Adam Peterson, views this as an opportunity to invest in the company's stock, particularly when it trades below its perceived intrinsic value.

The repurchase program provides the company with the option to execute buybacks under Rule 10b5-1 trading plans, allowing for stock repurchases during periods otherwise restricted due to securities laws or internal trading blackout periods. However, the timing and volume of the repurchases will depend on market conditions, stock price, regulatory requirements, and other investment opportunities.

In addition to the share repurchase program, Boston Omaha also announced the departure of Co-CEO and Co-Chair Alex Rozek, who is set to pursue new entrepreneurial opportunities. Adam Peterson will now serve as the sole Chair and CEO of the company.

In related news, analyst firm Wells Fargo has revised its price target for SailPoint Technologies Holdings (NYSE:SAIL), reducing it to $17.00 from the previous $23.00. Despite this adjustment, the firm maintained its Overweight rating on the company's shares. This new price target reflects a more conservative view of the company's future earnings before interest, taxes, depreciation, and amortization. These are some of the recent developments surrounding Boston Omaha and SailPoint Technologies.

InvestingPro Insights

TD Cowen's recent outlook adjustment on Boston Omaha Corporation aligns with some of the insights available from InvestingPro. The company's strong liquidity position is supported by InvestingPro data, showing that their liquid assets exceed short-term obligations. This financial stability is crucial as Boston Omaha explores growth through strategic acquisitions and investments. Additionally, InvestingPro Tips highlight that the company operates with a moderate level of debt, which corroborates the analyst's note on the company's zero parent-level debt and the availability of investable funds.

However, despite the optimistic view on the company's operational potential and growth strategy, InvestingPro Tips also reveal that analysts do not anticipate the company to be profitable this year, and it has not been profitable over the last twelve months. This is reflected in the company's negative P/E ratio of -40.19, indicating that investors are paying more for each dollar of loss. Moreover, the company's high EBITDA valuation multiple suggests that the market may be expecting future growth to justify the current valuation levels.

For investors seeking a more in-depth analysis, InvestingPro offers additional tips on Boston Omaha Corporation, which can be accessed at https://www.investing.com/pro/BOC. These insights can provide a clearer understanding of the company's financial health and future prospects.

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