Pali Research Upgrades Warner Music Group (WMG) to Buy; Raises Estimates
WMG Hot Sheet
Rating Summary:0 Buy, 3 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 16 | Down: 7 | New: 23
Pali Research upgrades Warner Music Group (NYSE: WMG) to Buy.
Pali analyst says, "We have been quite negative on Warner Music and the broader music industry for the past few years, as we feared accelerating physical (CD) sales declines, a slower than expected ramp in digital revenues, weakening balance sheets with poor capital allocation and that music labels were essentially becoming unnecessary. While we expect the music industry’s declines/troubles to continue for at least the next couple of years with total domestic unit sales (physical and digital, including digital tracks converted to albums at 10:1) down an estimated 8% in 2009 and 6%-7% in 2010, compared to an 8.5% decline in 2008, we believe WMG is in a position to generate over $400 mm of EBITDA and nearly $200 mm of free cash flow (FCF) in each of the next several years. We are notably increasing our estimates going forward, with WMG now trading at only 3.7x ’10E FCF and 5.0x EBITDA."
To see more analyst ratings on WMG Click Here.
Warner Music Group Corp. is a music content company that classifies its business interests into two areas: Recorded Music and Music Publishing.
Pali analyst says, "We have been quite negative on Warner Music and the broader music industry for the past few years, as we feared accelerating physical (CD) sales declines, a slower than expected ramp in digital revenues, weakening balance sheets with poor capital allocation and that music labels were essentially becoming unnecessary. While we expect the music industry’s declines/troubles to continue for at least the next couple of years with total domestic unit sales (physical and digital, including digital tracks converted to albums at 10:1) down an estimated 8% in 2009 and 6%-7% in 2010, compared to an 8.5% decline in 2008, we believe WMG is in a position to generate over $400 mm of EBITDA and nearly $200 mm of free cash flow (FCF) in each of the next several years. We are notably increasing our estimates going forward, with WMG now trading at only 3.7x ’10E FCF and 5.0x EBITDA."
To see more analyst ratings on WMG Click Here.
Warner Music Group Corp. is a music content company that classifies its business interests into two areas: Recorded Music and Music Publishing.
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