Shares of Clear Channel Outdoor Holdings (CCO -0.78%) were moving higher today after the outdoor advertising company raised its fourth-quarter guidance and said that it was considering selling its European business.
As of 2:17 p.m. ET, the stock was up 8% on the news.
In a press release this morning, Clear Channel said that its board of directors had authorized a strategic review of its European business, which includes a potential sale. CEO William Eccleshare added in a statement, "We believe now is the right time to explore options for our European business, which delivered significant improvements in revenue performance in the third quarter, and we now expect Europe revenue in the fourth quarter to exceed our results in the same period of 2019."
Separately, Clear Channel Outdoor also raised its fourth-quarter guidance, calling for revenue of $730 million to $750 million, up from a previous range of $715 million to $740 million, which was better than fourth-quarter 2019 revenue at $717 million. An increase in the European guidance to a range of $350 million to $360 million was entirely responsible for the overall revenue guidance increase. Management also saw profitability getting better, forecasting adjusted margins in earnings before interest, taxes, depreciation, and amortization in the Americas of 42.3%, above fourth-quarter 2019 levels.
Investors often respond warmly to strategic review announcements, and a sale of Clear Channel's European business could help pay down some of its $5.7 billion in debt, which is weighing on the company's profitability as it's on track to pay more than $300 million in interest expense this year.
Additionally, the increased guidance bodes well for the recovery in the outdoor advertising business as Clear Channel Outdoor should continue to gain from the COVID recovery.