iHeartMedia did forecast a Q1'23 EBITDA target between $80 to $90 million, well below analyst estimates at $133 million.
Morgan analyst has a price target of $5 on the stock now for a market cap in the $600 million range for a company that just generated $950 million in adjusted EBITDA in 2022. With the quarter nearly over, investors should latch onto a trend of under promising on estimates. Worth noting, the company guided to Q4'22 revenue growth of 2% to 6% and hit the upper end of the range with the reporting of 6% growth. The company guided to weak Q1 EBITDA after a slow revenue start to the year due in part to internal mistakes. If so, investors get to purchase the stock at the covid lows despite as vastly better financial picture over the long term. The key here is whether the media company can maintain adjusted EBITDA at record highs. The fourth quarter was our best quarter for revenue and adjusted EBITDA ever, and on a full year basis, in 2022, we generated the highest revenue and second highest adjusted EBITDA and free cash flow year in iHeart's history. As per the CEO on the Q4'22 earnings call, iHeartMedia is coming off a strong year after being left for dead during covid:
The stock plunged last week on the week guidance, but the media company did report a quarterly adjusted EBITDA record at $316 million. January sales were down 1% and the Q1 guidance is for a mid-single digit revenue decline in the seasonally worse quarter. The market didn't like the negative sales guidance for Q1'23, but iHeartMedia is in a far better position now with a much more profitable business to handle the short term ad market hiccups despite the higher levels of debt. iHeartMedia is now a podcast powerhouse with a monthly audience of 33 million, nearly 50% above second place Wondery. The Podcast business has remained a strong part of the growth story, with a nearly 17% sales increase in Q4. The Multiplatform Group has struggled to return to pre-covid sales levels and didn't even grow 1% during Q4, yet the media company grew revenues by 6% for the quarter. The December quarter provided a prime example of how iHeartMedia is vastly different from the pre-covid company in financial distress. Source: Finviz Impressive Holiday Quarter My investment thesis is ultra Bullish on the stock after the dip to $5. The media company has a much better diversified business to thrive during a weak ad market, unlike during the covid slowdowns. After another solid quarter considering the macroeconomic environment, iHeartMedia ( NASDAQ: IHRT) plunged to new lows over a strange reaction to record quarterly adjusted EBITDA.
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