That would be Wells Fargo Securities, which is initiating coverage of the multimedia communications company. According to WFS Senior Analyst Marci Ryvicker, this is one company that “gets it.”
Gannett owns and operates local broadcast television stations, key digital properties and newspapers including USA Today.
“It” is defined as “…understanding its customers and taking a proactive approach when it comes to investing in the business, while still returning capital.
The stock is fetching a little over $30 per share at the moment, and WFS expects it to outperform and make it to the $34-$36 range, fueled largely from the broadcast and digital facets of the business.
Looking at the television group, Ryvicker saidk “GCI’s affiliate mix, size, and large market focus provides significant leverage when it comes to advertising, political, costs (programming and syndication), and net retrans. In our view the big question is what happens when the legacy CBS and NBC agreements come due.” It is expected to suffer the usual odd-year revenue decline in 2017 but outperform its peers when it comes to retransmission consent profit margins.
WFS is enthusiastic about the presence of Cars.com and CareerBuilder in the Gannett portfolio.
The analysts also believe that the company has financial headroom for $2.8B in M&A, and thinks some tuck-in buys may be in the cards.
On the newspaper front, Ryvicker said WFS is remaining prudently conservative in assessing its prospects, but added, “…our gut tells us that the company’s All Access and USA Content Edition strategies should boost profits over the long term. And we like how this segment is positioned post spin – no debt should provide ample opportunity for accretive M&A.
