Benchmark has adjusted its price target on shares of Nexstar Broadcasting Group (NASDAQ: NXST), decreasing it to $215 from the previous $225, while reaffirming a Buy rating on the company's stock.
The adjustment follows a period where Nexstar has experienced some challenges in the market, according to the firm.
The analyst from Benchmark noted that Nexstar, despite being a top performer in its sector, has seen a combination of minor issues that have collectively applied downward pressure on the company's fundamentals.
This has resulted in the stock not providing the expected returns, especially in a national market struggling to gain momentum.
Nexstar has seen some bright spots, such as benefits from additional sports programming on the CW network, which the company has introduced in recent years. These positives, however, have not been enough to offset a decrease in non-political advertising revenue, leading to a downward revision of the company's EBITDA projections for 2024 and 2025.
The firm has increased its political advertising forecast for Nexstar by about $20 million, potentially a conservative estimate, to $600 million. Despite this, reductions in non-political advertising revenues have led to a $20 million decrease in the expected 2024 EBITDA and a $55 million reduction for 2025. Benchmark anticipates that consensus figures may adjust closer to $1.6 billion over the next few months unless market trends see a significant turnaround.
In other recent news, Nexstar Media Group (NASDAQ:NXST) has undergone significant changes in its executive team and financial outlook. As part of a restructuring effort, the company announced the departure of Michael Strober, its Executive Vice President and Chief Revenue Officer. This move is in line with Nexstar's initiative to streamline its organizational structure.
Analyst firm Guggenheim maintained a Buy rating on Nexstar but adjusted the price target from $200.00 to $198.00 due to changes in the company's third and fourth-quarter financial outlook. The firm's revised forecast projects third-quarter revenue and EBITDA at $1.373 billion and $473 million, respectively, while fourth-quarter revenue is anticipated to be $1.603 billion with EBITDA at $684 million.
These adjustments are due to a softer advertising market and the early execution of The CW's NASCAR contract. However, political advertising is expected to remain strong with Guggenheim forecasting a record $604 million in political ad revenue.
In addition, Nexstar has achieved record total net revenue and the highest quarterly distribution revenue for three consecutive quarters, bolstered by strategic partnerships with major sports leagues and the successful launch of NewsNation. The company's Board of Directors has welcomed Ellen Johnson and approved a substantial $1.5 billion share repurchase authorization.
InvestingPro Insights
Nexstar Broadcasting Group's financial metrics and recent performance align with Benchmark's analysis, as reflected in the latest InvestingPro data. Despite the challenges noted in the article, Nexstar maintains a strong dividend profile, with a current dividend yield of 3.98% and an impressive dividend growth of 25.19% over the last twelve months. This supports Benchmark's expectation of continued dividend increases.
InvestingPro Tips highlight Nexstar's commitment to shareholder value, noting that "Management has been aggressively buying back shares" and the company "Has raised its dividend for 11 consecutive years." These actions reinforce the article's mention of Nexstar's ongoing share repurchases and dividend increases strategy.
The company's P/E ratio of 12.48 (adjusted for the last twelve months) suggests that the stock may be undervalued relative to its earnings, potentially offering an opportunity for investors despite the lowered price target. Additionally, InvestingPro calculates a fair value of $214.99 for Nexstar, which is closely aligned with Benchmark's new target of $215.
For readers interested in a deeper dive into Nexstar's financials and future prospects, InvestingPro offers 7 additional tips that could provide valuable insights for investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.