What happened
Shares of IHeartMedia (IHRT -1.81%) were moving higher today after the broadcast and digital media company got an analyst upgrade, stoking hopes for a recovery as the pandemic fades.
As of 1:41 p.m. EDT on Tuesday, the stock was up 10.3%.
Image source: Getty Images.
So what
J.P. Morgan analyst Sebastiano Petti lifted his rating on the stock this morning from underperform to neutral and hiked his price target from $13 to $17. Petti argued that advertising revenue will recover sooner than expected, and noted the company's recent strength in digital revenue growth and EBITDA margins. He also cited upside from the company's acquisition of Triton, a digital audience and advertising measurement business it bought from E.W. Scripps (NASDAQ: SSP) last month for $230 million. Finally, Petti note the potential for "strategic optionality" for the company, meaning unanticipated ways it can grow.
Now what
Recovery stocks have been on a roll in the last few weeks, so it's not surprising to see IHeartMedia joining the pack. The broadcaster should benefit from increased time commuting and being spent outside the house, as radio-listening is most often done inside the car.
The stock has recovered from steep losses when the pandemic struck and is now trading roughly even with where it was at the start of 2020. In its fourth-quarter earnings report, which came out at the end of February, the company reported a 9% decline in revenue to $936 million, improving from the prior quarter, and said adjusted EBITDA was down 13% to $265 million.
The company didn't offer guidance for 2021, but the recovery since the start of the pandemic bodes well for 2021. Still, with the shares now trading as high as they've been since the 2019 IPO, investors may be wondering how much higher this media stock can go.
