The Wells Fargo Securities analyst says the group's recent purchases of 29 stations in 19 markets are sound moves. "We like SBGI's scale, leverage and opportunistic approach to M&A and anticipate there is more to come."
Ryvicker Gives Thumbs Up To Sinclair Buys
Broadcast stock analyst Marci Ryvicker and her crew at Wells Fargo Securities are bullish on Sinclair Broadcast Group after its latest station buying spree. “We like SBGI’s scale, leverage and opportunistic approach to M&A and anticipate there is more to come,” they say in an investor’s note released this morning.
The bright assessment follows Sinclair’s purchase over the past two weeks of five stations from Cox Media Group for $99 million and 24 stations from Barrington Broadcasting for $370 million. Together, the deals added 29 stations in 19 markets to the Sinclair fold.
With retransmission consent and other synergies taken into account, the note says, Sinclair is paying just 4.6 times cash flow for Cox and 5.2 times for Barrington while maintaining a healthy debt profile of 5.1 times at the end of 2013.
According to Wells Fargo estimates, the acquisitions will boost 2013 revenue to $1.4 billion from $1.2 billion and 2013 EBITDA from $489.6 million from $420.4 million. That’s a EBITDA margin of 35.7%.
All considered, Wells Fargo upped by $2 its stock valuation of the company to a range of $19 to $21. The stock closed Friday at just under $16.
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