Benchmark has reiterated a Buy rating on TEGNA, Inc. (NYSE: NYSE:TGNA) with a steady price target of $21.00.
The firm's analyst highlighted the recent performance of TEGNA's shares, which have approached 52-week highs.
The surge is attributed to two main factors: the strength in political advertising and speculation regarding a potential change in the U.S. presidency.
TEGNA's management team has undergone significant changes, executing a more extensive than anticipated clean-up of the company's operations.
Despite these internal shifts, the analyst pointed out that the same national trends affecting other companies with strong balance sheets in the market could impact TEGNA, especially given its extensive market reach. However, the upcoming Olympics might offer a boost due to the company's NBC affiliation.
TEGNA's strong free cash flow and capital return program are seen as factors that could limit the downside risk for the stock. Unless the new management implements drastic operational changes, the downside is expected to be contained.
Furthermore, there could be additional opportunities for expense management in 2025, which may provide further support for the share price if more concrete plans are announced in the coming quarters.
In other recent news, TEGNA reported a decrease in total company revenue for Q2 2024, primarily due to subscriber losses and a weaker national advertising market. However, resilience was noted in TEGNA's local advertising sector, particularly its connected TV sales platform, Premion.
The company also anticipates a rise in third-quarter revenue due to political ads and the Olympics, and maintains its adjusted free cash flow guidance of $900 million to $1.1 billion for 2024-2025.
TEGNA has also entered into a new multi-year broadcast rights agreement with the Dallas Mavericks, expanding the team's television reach to an estimated 10 million people in Texas. This deal will significantly increase the number of households able to watch the Mavericks play.
In terms of executive changes, TEGNA announced the upcoming departure of Senior Vice President and Chief Legal Officer Lauren S. Fisher, effective September 6, 2024. Simultaneously, the company appointed Jim Kizer as president and general manager of its Des Moines, Iowa stations WOI and KCWI.
Lastly, TEGNA announced that Lynn Beall, its executive vice president and chief operating officer of media operations, will leave the company in mid-2025. This announcement marks the beginning of a significant transition for TEGNA as the company prepares to evolve its strategic approach.
InvestingPro Insights
TEGNA's recent performance aligns with Benchmark's bullish outlook, as reflected in InvestingPro data. The company's stock is currently trading near its 52-week high, with a 97.04% proximity to its peak. This strength is further evidenced by impressive short-term returns, including a 12.46% gain over the past month and a 20.31% increase over six months.
InvestingPro Tips highlight TEGNA's financial stability and shareholder-friendly policies. The company has maintained dividend payments for 54 consecutive years and has raised its dividend for 3 consecutive years, demonstrating a commitment to returning value to shareholders. This is particularly relevant given the analyst's emphasis on TEGNA's strong free cash flow and capital return program as potential downside protection for the stock.
The company's valuation metrics also support a positive outlook. With a P/E ratio of 6.73 and a Price to Book ratio of 0.95, TEGNA appears undervalued relative to its peers. This aligns with the analyst's suggestion that there may be more upside potential for the stock this year.
For investors seeking a deeper understanding of TEGNA's financial health and growth prospects, InvestingPro offers 5 additional tips, providing a comprehensive analysis to inform investment decisions.
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