Nomura Securities on U.S. Media: Q1 Ad Tracker - U.S. Advertising Rebounds 1Q, While Agency Growth Remains Steady
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Rating Summary:
35 Buy, 19 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Nomura Securities on U.S. Media: Q1 Ad Tracker
Analyst, Michael Nathanson, said, "U.S. advertising growth, as measured by the Nomura Ad Tracker rebounded off of 4Q weakness and grew 5.3% in the first quarter. Even excluding Online's 11.8% growth in 1Q12, traditional media advertising returned to positive growth at 3.2%, a 530bps sequential acceleration from 4Q11. Easier political compares and the return of NBA programming in the quarter helped advertising."
"Following our meetings, we came away with three major takeaways: 1) The continued shift to digital continues to grow rapidly and is becoming a lot more sophisticated than simply buying banner ads; 2) To that point, mobile and “earned” media will be the next legs of digital growth; 3) In addition to the revenue benefits from the increasing complexity of digital marketing, geographical diversification also continues to drive client’s needs and, thus, agency budgets."
"Given that 1Q advertising was in line with our expectations, we are maintaining our U.S. advertising estimates of 5.5% for 2012 and 2.9% for 2013. We continue to believe that upside to earnings estimates from advertising surprises is unlikely and recommend undervalued media stocks with structural growth drivers like near-term affiliate fee renewals (e.g.: Buy rated Disney (NYSE: DIS), News Corp (NYSE: NWS)). In the Internet sector, we recommend Buy-rated Google (Nasdaq: GOOG), which we believe will continue to benefit from search and display gains."
Analyst, Michael Nathanson, said, "U.S. advertising growth, as measured by the Nomura Ad Tracker rebounded off of 4Q weakness and grew 5.3% in the first quarter. Even excluding Online's 11.8% growth in 1Q12, traditional media advertising returned to positive growth at 3.2%, a 530bps sequential acceleration from 4Q11. Easier political compares and the return of NBA programming in the quarter helped advertising."
"Following our meetings, we came away with three major takeaways: 1) The continued shift to digital continues to grow rapidly and is becoming a lot more sophisticated than simply buying banner ads; 2) To that point, mobile and “earned” media will be the next legs of digital growth; 3) In addition to the revenue benefits from the increasing complexity of digital marketing, geographical diversification also continues to drive client’s needs and, thus, agency budgets."
"Given that 1Q advertising was in line with our expectations, we are maintaining our U.S. advertising estimates of 5.5% for 2012 and 2.9% for 2013. We continue to believe that upside to earnings estimates from advertising surprises is unlikely and recommend undervalued media stocks with structural growth drivers like near-term affiliate fee renewals (e.g.: Buy rated Disney (NYSE: DIS), News Corp (NYSE: NWS)). In the Internet sector, we recommend Buy-rated Google (Nasdaq: GOOG), which we believe will continue to benefit from search and display gains."
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