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Wells Fargo Downgrades Broadcast Television Sector to Market Weight (GTN) (LIN) (NXST) (SBGI)

March 17, 2014 7:08 AM EDT
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Price: $6.26 +0.64%

Rating Summary:
    8 Buy, 1 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 10 | New: 11
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Wells Fargo downgraded Gray Television (NYSE: GTN), LIN Media LLC (NYSE: LIN), Nexstar Broadcasting Group, Inc. (Nasdaq: NXST), and Sinclair Broadcast Group Inc. (Nasdaq: SBGI) from Outperform to Market Perform. Analyst Marci Ryvicker is cautious on the regulatory environment.

"Over the near to medium term, we foresee a "rationalizing" of the sector and truly believe that those who survive will end up in positions of great strength. We just don’t know however, how or when this theory will play out. We really hope our thesis proves to be wrong over the next several months. But after spending a day in Washington D.C. (3/14), we can't get over our fear that the regulatory environment is more than likely to remain an overhang for quite some time," said Ryvicker.

"At this point, we feel that the stocks are likely range-bound at 6-7x blended free cash flow. The good news is that our companies under coverage already appear to reflect this, even on our newly reduced estimates, which to us suggests limited downside risk (unless there is the need for further estimate cuts). The bad news is we see limited upside potential – all due to the regulatory environment – hence, our sector downgrade to Market Weight," added the analyst.

For an analyst ratings summary and ratings history on Gray Television click here. For more ratings news on Gray Television click here.

Shares of Gray Television closed at $10.51 yesterday.


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