On Thursday, Maxim Group revised its price target for Emerald Expositions Events (NYSE:EEX), dropping it to $8 from the previous $11 while keeping a Buy rating on the stock. This adjustment follows the company's third-quarter earnings report released yesterday, which showed flat year-over-year revenue of $72.6 million and a 56% increase in adjusted EBITDA to $12.5 million.
The results fell short of both Maxim Group's estimates and the consensus, attributed to event cancellations and a downturn in the Content business.
Emerald Expositions' third-quarter performance, traditionally its weakest season, was impacted by event cancellations and underperformance in certain areas. Despite these challenges, growth prospects for the company include the continued recovery of trade shows, high visibility on future revenues with bookings for the second half of 2025 already underway, the introduction of new organic events, strategic mergers and acquisitions, and the implementation of artificial intelligence initiatives.
In response to the quarterly outcomes, Emerald Expositions has decided to discontinue 20 less profitable events, which previously contributed $20 million to their revenue. The company has also adjusted its 2024 revenue and adjusted EBITDA guidance upwards by approximately 5% year-over-year, signaling a more conservative outlook than earlier projections. The new revenue forecast is at least $400 million, with adjusted EBITDA expected to be at least $100 million.
The company's financial health appears stable, with a net leverage ratio of 2.1x as of September, which is within their target range of 2.0x to 3.0x. Emerald also has access to a $110 million untapped revolving credit facility. A significant financial restructuring occurred in May 2024, when convertible preferred stock was converted into equity, a move that Maxim Group views as having eliminated a major financial overhang.
Maxim Group's lowered price target is based on an 11.0x multiple applied to its 2026 adjusted EBITDA estimate. The firm's outlook suggests that Emerald Expositions is not in a position where it needs to raise additional capital, and it currently trades at an enterprise value to EBITDA (EV/EBITDA) multiple of 8.0x, based on the firm's 2026 adjusted EBITDA projections.
InvestingPro Insights
Recent InvestingPro data provides additional context to Emerald Expositions Events' (NYSE:EEX) current financial situation and market performance. The company's market capitalization stands at $835.23 million, with a revenue of $393.4 million for the last twelve months as of Q2 2024. This represents a 7.84% revenue growth over the same period, aligning with the company's efforts to improve profitability despite recent event cancellations.
InvestingPro Tips highlight that EEX is currently trading near its 52-week low, with the stock price taking a significant hit over the last week and month. This aligns with Maxim Group's decision to lower the price target. However, analysts predict that the company will be profitable this year, which could provide some optimism for investors.
The company's P/E ratio of -12.77 and adjusted P/E ratio of -2.74 for the last twelve months reflect its current unprofitability, as noted in another InvestingPro Tip. However, the operating income margin of 14.84% and EBITDA of $91.1 million for the last twelve months suggest that the company is generating positive cash flow from its operations, which supports Maxim Group's view on the company's stable financial health.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide valuable insights into Emerald Expositions Events' financial outlook and market position.
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