A Big Wall Street Confidence Boost for IHRT

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Talk about a vote of approval.


A veteran Wall Street media analyst has significantly raised her target price for iHeartMedia, and took her rating on the company’s stock up not by one notch, but two.

Jessica Reif Ehrlich, today an analyst with Bank of America Securities, upgraded IHRT to “Buy” — from “Underperform.”

Even more astounding, Ehrlich raised her price target on iHeartMedia to $26 per share, from $10.

Why? Ehrlich is convinced the advertising market will come “roaring back” over the next several months. And, in the case of iHeart, adjusted EBITDA at the end of 2021 could return to where it was in 2021. In Ehrlich’s view, the adjusted EBITDA iHeart will see in 2021 is now forecast at $798 million, up from $744 million.

Investors responded Tuesday by snapping up iHeart shares, pushing IHRT to $19.79, up 13.2% from Monday. Just after Noon on Wednesday, IHRT was trading at $19.80. At the closing bell, shares cooled off to $19.63, giving back 16 cents after Tuesday’s growth.

Why is Ehrlich hot on iHeart? Its sheer scale is one likely factor, with stations across a variety of market sizes and profitability in the nation’s biggest markets — something that proved difficult for Cumulus Media and remains a challenge for Audacy’s former CBS Radio stations.

There are also studies pointing to increases in drive-time listening.

But, iHeart is also being singled out for its podcasting arm.

As small and medium-sized businesses continue to reopen, Ehrlich believes iHeart properties are poised to benefit from increased ad dollars.

Furthermore, as live events ramp up again, iHeart will see added revenue.

Lastly, iHeart gets Ehrlich’s strong stamp approval for now having “manageable debt maturities with significant capacity to de-lever the business, facilitating a highly favorable capital structure shift in favor of equity.”

 

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