Shares in leading local out-of-home player oOh!media jumped after investment bank Macquarie upgraded its shares to outperform.
The analysts cited improving conditions with expected rate cuts, operating leverage with cost cutting and an attractive valuation.
The shares were up almost 6% to $1.245 at the close.
“We are attracted to the out-of-home ad category, which should see growth above 4% annually within Australia, outpacing overall ad spend growth in the medium term, benefiting from the ongoing structural decline of free-to-air TV, radio and print,” the analysts said in a note to clients.
The analysts believe the ad market is primed for growth in 2025.
Rate cuts are likely and should flow through to improved consumer/business confidence, a driver for higher ad spend, they said.
And there will be a benefit from the federal election due in May.
“A key debate on the out-of-home category in Australia is competition with three main operators, including oOh!media,” the analyst said.
“Importantly, we understand that competition had been less rational, but is improving in recent contract bids, and as such, we would expect less gross margin pressure going forward."
oOh!media, facing a “challenging” advertising market, announced in December a restructure to simplify operations and save up to $15 million in costs.
Group revenue calendar year 2024 is expected to be between $633m and $638m.
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