CFRA Upgrades Warner Music Group (WMG) to Hold

CFRA analyst Ken Leon upgraded Warner Music Group (NASDAQ: WMG) from Sell to Hold with a price target of $32.00 (from $30.00).

The analyst comments "We raise our target price by $2 to $32 using forward TEV/EBITDA of 11.8x our FY 25 (Sep.) EBITDA estimate at $1.67B, below the peer average at 13.0x. We keep our EPS estimates in FY 24 at $1.10 and FY 25 at $1.45. Revenue rose 12% Y/Y in Q2 FY 24, with healthy growth in music publishing and higher streaming revenue. We think FY 24 to date shows improved growth following weaker FY 23 results, with a gap in recorded music releases. WMG is finding distribution via TikTok and other social media channels as critical. In April, WMG launched Warner Music South Asia to address a region with 400 million people across Bangladesh, Nepal, Pakistan, and Sri Lanka. WMG is highly leveraged with 87.9% total debt to total capital ratio. Access Industries is the controlling shareholder, with 72.3% economic interest and 98% voting power in the common shares. For total debt, the nearest maturity date is 2028. In February, WMG announced a plan to deliver $200 million of annualized run rate cost savings by end of FY 25."

For an analyst ratings summary and ratings history on Warner Music Group click here. For more ratings news on Warner Music Group click here.

Shares of Warner Music Group closed at $30.45 yesterday.

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