Analysts at Macquarie Bank and Credit Suisse still highly rate ASX-listed oOh!media despite the out of home advertising player downgrading its earnings outlook on a fall in bookings.
oOh!media this week posted a half year profit dragged down by subdued trading during the May federal election and a softer economic environment.
Underlying net profit after tax was $9 million, down 24%, in the six months to June. Revenue overall was up 5% to $304.9 million in the half year to June despite a 9% fall in roadside billboards advertising.
The result followed a string of companies reporting weak, challenging or tough advertising market conditions. Morgan Stanley has called an advertising recession in Australia.
oOh!media is forecasting underlying EBITDA to be between $125 million and $135 million for the full year. Previous guidance was between $152 million and $162 million.
Analysts at Macquarie Wealth say: "Despite the recent guidance update for the full year, we believe 1H19 was a reasonable result and was in line with our pre-downgrade estimates."
The analysts rate the company's as Outperform with a 12-month share price target of $4.35.
"The focus going forward remains on the health of ad markets in general and, specifically, within out of home," write the analysts in a note to cleints.
"A number of Media operators have flagged an improving outlook for September and October, although this is against softer comps, and visibility beyond that is limited.
"For oOh!, any signs that Banks and Auto are coming back with incremental ad spend would be a positive."
Credit Suisse has also retained its Outperform rating on oOh!media. They have placed a $3.70 price target on oOh!media.
Analysts, in a note to clients, write that “current ad/sector headwinds are transient”.
The Credit Suisse analysts says: “Against the backdrop of a challenging media environment, OML delivered a very respectable 1H.”
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