So, what are these radio stocks worth, anyway?


If you look at today’s stock chart in RBR, you’ll see that 17 are penny stocks, with per share prices below $5 – and 11 of those are trading below $1. Once the economy turns around, what should those stocks recover to? After listening to the latest round of quarterly conference calls, Wachovia analyst Marci Ryvicker has updated her view on some of the radio stocks. Mind you, she’s not saying she expects anything to happen soon to move the prices back up.

Entercom suspended its dividend last week – “No surprise given this environment,” said Ryvicker – and its stock dropped well below a buck a share. “The market was clearly not giving Entercom credit for its dividend (in our view) given its approximate 50% yield. We anticipate that Entercom will utilize the $15 million annual payout to repurchase its debt and/or equity,” she said in a note to investors.

Ryvicker figures the stock should be worth $2-4, although she notes the risk of a longer-than-expected downturn. “We think that Entercom is one of the best pure-play radio companies given its excellent management team and asset base. However, given the industry’s lack of pricing power and the current consumer-led recession, we don’t foresee a near-term catalyst that will boost the stock,” she concluded.

While Entercom did a bit better than expected in Q3, Citadel underperformed and Ryvicker cut her 2008 and 2009 estimates for the company. “While we applaud management for its focus on cost cutting and debt repayment, we remain cautious given a very difficult economic and radio environment,” she wrote. The analyst’s value estimate for the stock is $1-2.

With Cumulus Media forecasting Q4 revenues to decline 9-11% — in line with other radio companies – Ryvicker cut her 2009 estimates. Her long-term view is that the stock should be worth $1-3, but she cautions that Cumulus has a risk of tripping on its loan covenants. “Given the lack of pricing power throughout the radio industry and the uncertain economic environment, we remain cautious on the shares of Cumulus,” she noted.

The Wachovia analyst does not have a buy rating on any of these stocks. Rather, Ryvicker ranks each of the three “market perform” and the radio sector “market weight” – that’s a double neutral.