The higher than expected estimates on advertising sales in the first half of the year push the Mediaset stock on the stock exchange, up by 2.63% at the moment to 3.046 euros. Yesterday evening the group issued a press release in which it indicated for the first half of the year in Italy an increase in advertising revenues of approximately 31.5% year on year with a second quarter growing by more than 65% year on year (+6 % in the first quarter), i.e. + 4% compared to the second quarter of 2019, with the month of June which Equita Sim estimates to grow by approximately 7% (-2 / 3% on June 2019) after the + 100% in April and May.
These indications implicitly indicate advertising sales in the first half of 2021 substantially in line with the same period of the pre-pandemic 2019. At the same time, the advertising revenues indicated by the management show a surprising growth of 4.7% compared to the second quarter of 2019 (pre-covid). It is possible to imagine that on the basis of these numbers, analysts’ consensus on 2021 will be raised to align with the indications of Mediaset management.
“The positive indications of the second quarter on advertising revenues in Italy make our 2021 estimates too conservative”, commented Bestinver Securities this morning, according to which these indications confirm the positive momentum of the company in the semester, now substantially in line with the performance of 2019. or 979 million euros in 2021 against 985 million in 2019.
So “we have increased our advertising revenue estimates for this year in Italy to + 11% compared to our previous hypothesis of + 6.5% which in our opinion reflects the positive indication provided for the second quarter of 2021”, he said. announced Bestinver, recalling, moreover, that its new estimate on Mediaset advertising revenues in Italy implies a slowdown in the second half of -4.4% compared to 2020, “which in our opinion is reasonable considering the lack of advertising revenue from Champion League in the third quarter, as well as the strong performance in the fourth quarter of 2020: + 3.5% compared to the fourth quarter of 2019 “.
Based on the new estimates on advertising revenues in Italy and leaving costs in line with the guidance (between 1,740 million and 1,777 million, Bestinver’s estimate of 1,751 million), “we increase Italy’s EBIT to 199 million from 132 million, pointing out that every 1% increase in revenues should contribute positively for 15 million euros in terms of EBIT. We have raised our estimates for 2021/2022 in terms of revenues, EBIT and net profit by +2 at group level % / + 18% / + 19%, respectively, and therefore we have also updated the target price on the stock from 2.4-2.7 euros to 2.8-3.2 euros, but we confirm the hold rating on the stock “, concluded the broker.
Equita Sim also raised its target price by + 7% to 3.16 euros this morning (with the special dividend of 0.3 euros that will be paid on 21 July, the rating remains hold) after increasing the estimate of advertising revenue on full year from the current + 8.5% to + 11.4%, that is a substantially flat level on 2019. The 2021/2022 estimates also improved by 7% average at ebit level and 8% at net profit level .
The new forecasts of Banca Akros are very similar, bringing the estimate on the growth of Mediaset advertising sales for the entire year to + 11% compared to the previous + 5.5% (the consensus is around + 7%) “which could be in the end prudent as it implies -4% year on year in the second half “, warned Banca Akros. “In 2022 we increase our forecast by 4% implying a year-on-year growth of 3.5% from the previous + 5%. We also include the positive contribution of the contract with Dazn for Serie A in the period 2021/2024 starting from the third quarter : we assume up to 10 million euros of annualized impact on EBIT “, pointed out the investment bank which, however, has forecast that the cost base will increase by 40 million euros year on year in 2021,
On balance, the increase in ebit estimates, again indicated Banca Akros, and exceeding 80 million euros for the year 2021 and above 70 million euros for the year 2022. The target price on Mediaset was raised from 2.70 to 3.25 euros per share (accumulated ratings). “The comparison will be more difficult in the second half, due to the impact of the Champions League in the third quarter of 2020, + 5% on the third quarter of 2019, and in the fourth quarter of 2020, + 3% on the fourth quarter of 2019”, explained Equita, appreciating the ability of Mediaset and the FTA to maintain their central role on the advertising market, thanks to the strength to quickly reach a large number of contacts.
In the next few years, with the penetration of Connected TV (also thanks to the transition to DVB-T2 from July 2022), Equita continued, Mediaset will be able to defend its shares of the advertising market thanks to the growth of Addressable Advertising, which is experiencing a significant interest in advertising investors, a market estimated to grow to 500 million in 2025.
The Mediaset ex-dividend stock trades at a premium with respect to the sector, that is to say at a p / e 2022 of 13 times against the 10 of the sector and an ev / ebit of 9 against 7.5. The company will pay the special dividend of 0.30 euros on 21 July and Vivendi has committed to sell a 5% stake to Fininvest for 2.7 euros post-dividend. Mediaset Espana per Equita remains the most convenient title with a s / s 2022 of 8 times and an ev / ebit of less than 4. The transfer of the headquarters to the Netherlands should facilitate the project of European aggregations on the FTA. (All rights reserved)
