Wells Fargo analyst Marci Ryvicker has consistently been a big fan of David Field and the Entercom management team over the years. In 2016, Ryvicker called Entercom a “hidden gem,” and had a price target of $16.00-$17.00 on the stock. In a January 2018 note to investors, Ryvicker said Entercom was “a different story,” compared to the rest of the radio industry’s weak revenue performance and high debt loads. Price target on the stock: $15.00. And in 2017 Ryvicker said she liked the Entercom/CBS merger deal. Entercom closed under $8.00 Wednesday. The stock has taken a beating over the past few days.
This week Entercom reported a revenue decline of 7.5% for the first quarter of 2018. The blame was placed on financial woes at United States Traffic Network, six format changes that have not produced upside ratings revenue as of yet, and a soft advertising environment. On Wednesday, Ryvicker took all the information in and issued a report calling Entercom’s first-quarter results “unfortunate.” Ryvicker said the issues with United States Traffic Network aside, the underlying growth still came in under what management expected and Q2 pacing doesn’t look any better. She also said there were “so many random expenses we could not figure out what a true ‘synergized’ (if such a word exists) EBITDA figure was for the quarter.” Ryvicker said she is reducing her estimates and price target for Entercom “and not by a little bit.”
Here’s Ryvicker’s new outlook on the company after digesting the Q1 results. “While the USTN situation is still uncertain, it is an isolated event; hence we can still analyze the underlying business — which was disappointing but nowhere near what actual results would suggest. Incorporating the $15 million USTN hit and a more modest local ad environment, we reduced our Pro Forma 2018 EBITDA estimate to $378MM from $432MM and 2018 Pro Forma Free Cash Flow to $1.52 from $1.80. These changes flowed through to 2019 and reduced our price target to $11 from $14.”
Ryvicker says there’s clearly a lot to fix at Entercom and has in the past described the company’s progress as two-steps-forward, one-step-back. “Right now, it might feel like one-step-forward, ten-steps-back BUT you really have to dig into what Entercom is doing.” She points out there is new management, a new culture, format changes, investments, data analytics, and a strategic shift into the network business.
So is Ryvicker ready to throw in the towel on Entercom? “We’re not ready to throw in the towel.”
Hey Roy,
First of all, with all due respect, I can surmise that you don’t actually work for or even closely with Entercom, or maybe not even in the radio industry, as you incorrectly spelled Entercom not once, but three times! So I have to take your ‘insight’ with a grain of salt. enough said…
Lol!! Wrong JJ Boy, or whatever your real name is! Ok attack me, because i spell Entercomm with 2 m’s, lol. “CBS” was much easier to spell!! You are wrong; I have been in the industry for years. And attacking me, ignores the facts that I stated. The fact is, Entercomm LA (I like the 2 m’s!!) is a complete train wreck. Top-down, fear-based dictatorial “management” does not work in 2018. Maybe it did in the 90’s, from which most Entercom management on this left coast has experience (which can be good or bad.) Maybe that is how Entercom corporate wants it. But at least in LA, IHeart is crushing Entercom on billing performance. Even Pandore LA is affecting Entercom’s billing, especially for new business.
The problem is, Entercomm is now doing the “same old, same old”… here in the West Coast, Entercomm top management is old-school radio personnel, and for the top market here (only behind NY) Entercomm brought back as their Market “Leader” someone who has bounced in and out of radio management jobs, been involved with digital start-ups, then back to radio, etc. You can’t fault someone for that, but that demonstrates a lack of serious passion or belief in the radio industry. And the atmosphere now at Entercomm here in the major Wesr Coast market is management through fear and intimidation, demands for constant paperwork and reports, meetings that run way too long… old school “management.”… So Entercomm at least out West, is seriously lacking in young, INNOVATIVE and risk-taking management and leadership– the very things that you absolutely need, to grow a company and grow revenues, especially in a mature industry!