Audacy’s Wall Street Bump and Dip

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In mid-December, Audacy Inc. shares earned an upgrade from Wall Street financial house B. Riley. The firm’s Daniel Day saw bad news for the audio media company “more than priced in” ahead of an earnings inflection for the coming year.


A better-known Wall Street analyst now shares that he sees things differently for the owner of Cadence13 and Pineapple Street, BetQL, the Audacy streaming app and AM and FM radio stations including KROQ/Los Angeles, WFAN/New York and WXRT/Chicago.

Audacy shares followed overall market declines on Tuesday after Wells Fargo analyst Steven Cahall downgraded AUD to “equal weight.”

Why? Cahall believes a recovery in revenue and earnings for the company that continues to experience slow turnaround at stations once owned by CBS Radio is “taking longer than we expected.” Couple in high-profile format changes at KITS-FM in San Francisco and WXBK-FM in New York and COVID-19 fueled questions about future events given the inability of Audacy Beach Festival headliner Swedish House Mafia from performing due to contracting the virus, and the picture is particularly hazy for Audacy.

The biggest concern, as demonstrated in the company’s Q3 2021 earnings, is Audacy’s exposure to Automotive compared to its peers. So long as auto dollars are weak at Radio, Audacy Inc. could be disproportionally hurt, dollar-wise, as it seeks to grow other categories at a slower place than other radio station owners.

Cahall also, interestingly, notes Audacy’s lesser exposure to digital — comments that come even as the Audacy app, formerly Radio.com, continues to grow.

“While those may be exogenous culprits, we don’t necessarily have a view that they’re set to improve quickly in 2022,” Cahall notes.

With the respected analyst souring a tad on Audacy and the “snap-back” story offered by an industry that has taken much longer than TV to rebound, Wells Fargo is cutting its 2022-2023 estimates for Audacy. Now, it expects 2022 spot revenue to be 82% of 2019’s. That’s  lower than the Q3 2021 guidance for about 85%. Furthermore, Wells Fargo expects 2022/2023 revenues to finish down about 2% from priors, while adjusted EBITDA is down by about 8%.

Lowering its valuation multiple due to higher volatility, Wells Fargo cut its target to $3, from $5, trimming implied upside to 11.5%.

As of 2:45pm Eastern, AUD was trading at $2.6650. The company’s stock has a 1-year target price of $4.30 based on total analyst expectations — including that rosy portrait presented by B. Riley in December.

Audacy shares have been below $3 per share since November 18, and have struggled to gain momentum even following the B. Riley assessment was made public.

Audacy will release its Q4 2021 and full-year 2021 fiscal results in the last week of February 2022.

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