Urban specialist Radio One hasn’t yet reported its Q4 results, but after looking at trends from other radio companies Gilford Securities analyst Jim Boyle has given the stock an upgrade. It is now officially a “buy.”
You’ll recall that Radio One spent much of 2010 on the refi from hell, finally reaching agreement with its senior lenders and bondholders in November. But the refinancing finally got to closing, so that distraction is history.
“We believe the potential plusses of ROIAK’s [the symbol for Radio One’s public Class D stock] positioning and recent actions are generally positive, with the offset by concern over high debt leverage, potential TV One purchases and uncertain management moves. Yet, even with the sluggish economy, the media peers continue to see ongoing ad rebound, which should boost ROIAK,” wrote Boyle as he boosted the stock to a buy. “We think our estimates may well be too conservative with ROIAK’s peers’ results, he added.
The analyst has been watching the renewed M&A action recently in radio. On an EBITDA basis, he put the Bonneville-Hubbard deal and roll-up of Cumulus Media Partners into Cumulus Media both in the range of 9.5 to 10 times trailing EBITDA. But he notes that Radio One has been trading at 7.2 times its trailing EBITDA.
