Bank of America analyst Jonathan Jacoby isn't a bull, but at least he's no longer a bear when it comes to radio stocks. Stock prices have fallen to what Jacoby says reflects his slow growth long-term view, so he's upgraded Citadel, Cox Radio and Entercom from "sell" to "neutral."
Jacoby had downgraded the trio to sell back in November, when the Wall Street consensus was that 2007 radio revenue growth would be in the 2-3% range. "We argued that persistent audience erosion would cap average top-line growth at approximately 1% over next five years and at less than 2% over the next ten years. Seven months into '07, it is evident that radio's best hope is for flat revenue this year. And investors seem to have responded to the continued malaise by revaluing the sector, which now reflects our tempered long-term view," Jacoby said in his update to clients on Friday.