Barclays Reiterates a Sell Rating on TEGNA Inc.

By Ryan Adsit

In a report released today, Kannan Venkateshwar from Barclays reiterated a Sell rating on TEGNA Inc. (NYSE: TGNA), with a price target of $20. The company’s shares opened today at $18.28, close to its 52-week low of $18.03.

Venkateshwar said:

“We downgraded Tegna to Underweight earlier in the year ( , April 1, 2016) due to: (a) lack of growth TEGNA: Downgrade to Underweight visibility across its businesses, and (b) limited likelihood of corporate actions near term due to the incentive auction. It can now be argued that the stock is cheap given EV/EBITDA of 7.2x, which implies a broadcast business multiple lower than Viacom or a digital business growing at multiples lower than comps with comparable growth. The company’s current FCF yield of 11.24% also appears attractive. Broadcast business will likely trade at a discount for some time: We believe visibility around numbers is still quite real. Even assuming broadcast EBITDA margins in the mid-40s, broadcast EBITDA growth is likely to be ~1.5-2% in the next couple of years. This is in an environment where most other local broadcasters operate in the 30-35% EBITDA margin range. Any pressure on margins could tip this growth to negative, which in our opinion explains the discount in multiples. The variables that could help broadcast next year are any unexpected spectrum sales in the incentive auction and/or an acquisition of another local broadcaster, which could add to post deal accretion due to distribution contract structures.”

According to TipRanks.com, Venkateshwar is a 1-star analyst with an average return of -5.5% and a 48.8% success rate. Venkateshwar covers the Services sector, focusing on stocks such as Charter Communications, AMC Entertainment, and Discovery Comms.

TEGNA Inc. has an analyst consensus of Hold, with a price target consensus of $25.50.

The company has a one year high of $28.95 and a one year low of $18.03. Currently, TEGNA Inc. has an average volume of 1.91M.

TEGNA, Inc. is comprised of a dynamic portfolio of media and digital businesses that provide content that matters and brands that deliver. It operates its business through the Media and Digital business segments. The segment includes television stations and is the independent station group of major network affiliates. The Digital segment is comprised of Cars.com; the online destination for automotive consumers; CareerBuilder; a global provider in human capital solutions; and other brands such as G/O Digital and Cofactor. The company was founded by Frank E. Gannett in 1906 and is headquartered in McLean, VA.