Will Emmis hit TV, but miss its radio guidance?
That's what Wachovia Securities analyst Jim Boyle is warning of. Emmis, always the canary in the coal mine because its fiscal year has it reporting earnings about a month ahead of other broadcasters, is due to report results next Tuesday (9/28) for its fiscal Q2 - - June-August. Boyle thinks Emmis may hit its 10.5% revenue growth guidance for TV, but miss its 3% target for its larger radio group - - and issue conservative guidance for fiscal Q3.
According to Boyle, the problem is not really Emmis - - it's radio. "We continue to believe that Emmis has valuable broadcasting assets and proven, talented management, but it is simply not immune to the radio industry's persistent, lackluster growth and therefore it cannot seemingly separate itself from the sector's poor stock price performance," Boyle told clients. "Although Emmis' TV segment should experience strong growth this quarter and next, its core segment, radio, is too often soft."
As we noted Monday (9/20/04 TVBR Daily Epaper #183), radio stocks (and many TV stocks) have fallen dramatically this year, but Boyle, like many of his Wall Street colleagues, is not advising any bargain-hunting in the beaten-down broadcast sector. "While Emmis is currently priced towards its 52-week low and is more inexpensive than the radio stock average in terms of valuation when you strip out its non-radio segments, we believe that its near term upside potential is significantly muted by the weakness in the radio industry in general," Boyle said. So, he has downgraded the stock from "Outperform" (or buy) to "Market Perform" (neutral).
TVBR observation:
We asked Monday, "Have we hit bottom?" Boyle's answer is maybe not, so he's not advising investors to buy Emmis, even if it appears to be one of the more attractively priced stocks in the radio sector. Hang on, this could be an unpleasant ride!
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