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On Monday, Benchmark raised the price target for Sinclair Broadcasting (NASDAQ:SBGI) shares to $30.00, up from the previous target of $29.00, while maintaining a Buy rating on the stock. The adjustment follows Sinclair's recent announcement that it expects a substantial increase in political advertising revenue for 2024. According to the company's release last Thursday, the forecast for political revenue has been increased by nearly $60 million, setting a new range between $442 and $469 million for the year.
The updated projection marks a significant rise from initial expectations, which were set above $350 million and would have represented a record excluding run-offs and one-time expenditures. The new estimate indicates growth of over $75 million compared to 2020, which translates to a 20% improvement on an as-reported basis. Despite these gains, Sinclair's core business is anticipated to be affected minimally in the third quarter, with a projected growth of 2-4%.
In light of the revised political revenue forecast, Benchmark has increased its full-year 2024 EBITDA forecast for Sinclair by $17 million. This conservative adjustment allows for potential reinvestment while considering the high-margin nature of incremental political dollars. Furthermore, Sinclair has recently made strides in optimizing its expense structure, which could lead to further financial upside.
The company's efforts in yield optimization and expense management are complemented by what Benchmark interprets as positive language regarding recent retransmission renewals. These factors combined suggest that Sinclair is well-positioned for a successful refinancing in the near future, which could alleviate one of the company's most significant financial burdens and set the stage for considerable debt reduction over the medium term.
In other recent news, Sinclair Broadcast (NASDAQ:SBGI) Group Inc. has upgraded its third-quarter advertising revenue guidance due to stronger-than-anticipated political advertising sales. The company now projects political ad revenues for the quarter to be between $140 million and $145 million.
Moreover, Sinclair revised its third-quarter core advertising revenue within its Local Media segment to $285 million to $293 million. Despite a slight decrease, the segment is projected to see a year-over-year growth of 2% to 4% in core advertising.
Simultaneously, Sinclair Broadcast Group announced the retirement of Jerry Fritz, Executive Vice President for Strategic and Legal Affairs at ONE Media, a subsidiary of Sinclair. Fritz's tenure was marked by strategic planning and public policy efforts, notably supporting the adoption of the NextGen Broadcast transmission standard. His contributions to the broadcasting industry were recently recognized with the International Achievement Award from the North American Broadcasters Association.
In recent developments, Sinclair's Ventures portfolio currently holds a cash position of $318 million, with plans to convert minority investments into majority stakes. The company's consolidated media revenues hit $792 million, with a 10% increase in adjusted EBITDA. For the second quarter, media revenues are projected to be between $813 million and $832 million, largely driven by political and distribution revenues.
InvestingPro Insights
As Sinclair Broadcasting (NASDAQ:SBGI) gears up for a boost in political advertising revenue, real-time data from InvestingPro provides a nuanced view of the company's financial health. With a market cap of $973.53 million and a significant dividend yield of 6.82%, Sinclair showcases a commitment to returning value to shareholders. This is underscored by the company's track record of maintaining dividend payments for 15 consecutive years. Moreover, recent performance metrics are encouraging, with a 25.72% total return on the stock price over the last three months, and a 31.74% return over the last six months, indicating strong short-term investor confidence.
Among the InvestingPro Tips, it's noteworthy that Sinclair operates with a significant debt burden, which is an important consideration for investors. However, the company's liquid assets exceed its short-term obligations, providing some financial flexibility. For those interested in deeper analysis, there are 12 additional InvestingPro Tips available, which can offer further insights into Sinclair's financial strategies and market position.
These financial metrics and strategic insights from InvestingPro suggest that while Sinclair faces challenges, such as a high debt load and recent profitability concerns, its strong dividend history and recent stock performance may appeal to certain investors. For a more comprehensive understanding of Sinclair's potential, investors can explore the full range of InvestingPro Tips at https://www.investing.com/pro/SBGI.
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