2023-07-17 09:00:37 ET
- Goldman Sachs analyst Brett Feldman initiated coverage of Stagwell ( NASDAQ: STGW ) at 'buy' with a price target of $12.00.
- The stock is up about 6% and currently trading at $7.85 in premarket trade on Monday.
- The bullish outlook is based citing 3 key factors, analyst Brett Feldman said.
- "As businesses continue to move their mix of advertising spending towards digital mediums, we anticipate STGW will continue to profit from secular tailwinds to digital advertising spend, which we anticipate will surpass total advertising spend by LSD through 2026E (ex-US politics)," he said.
- "Based on its excellent balance sheet and our projections for strong top line revenue growth, we anticipate STGW to produce sizable and expanding FCF and, as a result, have access to sizable money for M&A. In fact, we predict that over the next five years, STGW will have access to more than $2 billion in resources for discretionary expenditures. This estimate represents STGW's theoretical borrowing capacity at or beyond its medium-term aim of 2.0x net debt/EBITDA as well as our base case predictions for FCF," analyst Brett Feldman notes.
- "We believe that STGW’s valuation looks attractive based on our outlook for organic growth as well as potential upside from further M&A or other potentially accretive allocation of capital," he says.
- "We consider our 12-month price target of $12, which suggests that STGW should trade at about 8.5x 2024E EBITDA, to be conservative and see the potential for the stock to experience even greater multiple expansion over time if it is able to win bigger contracts and maintain an above-average growth profile," he added.
- Brett Feldman ratings are in line with the ratings from Seeking Alpha's Quant Rating system and SA analysts , which stands at Buy.
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Meanwhile, Wall Street analysts gives the stock a Strong Buy rating, with an average price target of $10.88.
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Now read: Stagwell: Growing Global Ad Spending A Boon To This Undervalued Small Cap
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Stagwell jumps 6% after Goldman initiates Buy ratings with a price target of $12.00 on above-average growth profile