EVC - Entravision Communications (EVC) - A Fast Pace Move To A Global Digital Company
Q3 exceeds expectations. The company had an impressive quarter with revenue growth of 216%. While revenues were in line with expectations at $199.0 million, adj. EBITDA beat our estimate, $23.2 million versus our estimate of $20.2 million. Digital on fire. Digital revenues increased nearly 10 fold from the year earlier quarter. Separately, the company made a small acquisition of 365 Digital, a South African based Digital Marketing Services company, for roughly $1.8 million. We believe that 365 is a developmental company, but with a strong marketing platform representing TikTok and is expected to expand into several African countries. Q4 pacings better than expected. Digital pacing was up 64%, which is better than our 46% Q4 revenue growth estimate. As such, we are raising our Q4 revenue expectation from $207.8 million to $226.1 million. We are raising our Q4 adj. EBITDA estimate from $24.6 million to $29.3 million. Combined with Q3 results, we are raising our full year 2021 revenue estimate from $733.7 million to $752.4 million and our adj. EBITDA estimate from $76.7 million to $83.1 million. Raising 2022 estimates. In spite of an loss of $20 million in revenue from the loss of a network affiliation in 3 of its markets, the company's strong growth in Digital should more than offset the impact. We are raising our full year 2022 revenue from $806.6 million to $868.9 million due to strong Digital revenue momentum. In addition, we are raising our adj. EBITDA estimate from $77.9 million to $90.3 million. Price target increased. We are once again raising our price target on the EVC shares from $12 to $15. Near current levels, the EVC shares trade at 8.9 times EV to our upwardly revised 2022 adj. EBITDA estimate, or near the low end of the company's historic 6 year trading averages. We believe that the multiple should expand to reflect its strong adj. EBITDA growth and the value of its Digital businesses. The shares are rated Outperform. Read More >>