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Wedbush Cuts Price Target on Clear Channel Outdoor Holdings, Inc. (CCO) Following Billboards Sale

January 12, 2016 8:18 AM EST
Get Alerts CCO Hot Sheet
Price: $1.65 --0%

Rating Summary:
    4 Buy, 5 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 10 | New: 11
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Wedbush maintained a Neutral rating on Clear Channel (NYSE: CCO), and cut the price target to $7.00 (from $8.00). On 1/7, CCO closed a deal to sell ~5,500 billboards in five markets to Lamar Advertising (LAMR). Markets sold were Seattle/Tacoma, Cleveland, Des Moines, Memphis, and Reno. With improved liquidity, we expect interest payments and dividends to take priority over debt repayment.

Analyst James Dix commented, "Stock outlook: with pro forma LTM leverage still at ~7x EBITDA, despite $458.5m in asset sales last week, our conviction in the way forward on debt – and thus the share price – is lacking. Sale multiple of ~12.5x trailing 12-month EBITDA (and ~11.5x forward) is unlikely to dent high leverage, even though most of proceeds should be shielded from federal tax by NOLs. At current levels, amounts owned to CCO by its parent would account for roughly half of CCO’s equity value, indicating substantial discount investors apply to repayment prospect. Although CCO may consider last week’s divested markets non-strategic, some were in the top-50, suggesting that, with positions still in 44 of the top-50 markets, CCO would be willing to sell more markets to improve liquidity and/or leverage."

For an analyst ratings summary and ratings history on Clear Channel click here. For more ratings news on Clear Channel click here.

Shares of Clear Channel closed at $5.11 yesterday.



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