Stock Market

Warner Music Group’s stock target reduced to $30 due to competition worries.

Warner Music Group Faces Price Target Cut Amidst Competition Concerns

CFRA Shifts Price Target for Warner Music Group

CFRA recently revised its financial forecast for Warner Music Group, slashing the stock’s price target from $36.00 to $30.00 while upholding a Sell rating. The adjustment stems from a forward TEV/EBITDA valuation of 13.0x, below the industry average of 14.8x, featuring leaders like Universal Music Group N.V. and Live Nation Entertainment Inc.

Analyst’s Outlook on Warner Music Group

CFRA views Warner Music Group as a potential underperformer compared to its competitors in 2024 despite a 38% stock price surge since last May. The firm believes the market’s optimistic expectations for the company’s growth are excessive given its projected single-digit increase.

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Steady Earnings Projections

CFRA maintains its earnings per share forecasts for Warner Music Group at $1.20 for 2024 and $1.50 for 2025, with revenue estimates at $6.5 billion for 2024 and $6.8 billion for 2025. EBITDA expectations stand at $1.46 billion for 2024 and $1.56 billion for 2025.

Market Share Challenges

Warner Music Group’s market share remains in the low teens compared to competitors like Sony Music Publishing and Universal Music Group, which hold mid-20% market shares. The company faces hurdles in music distribution through platforms like TikTok, posing potential performance obstacles.

Ownership and Financial Concerns

Access Industries has a significant 72.3% stake in Warner Music Group, and the company’s high leverage is evident in a total debt to total capital ratio of 87.5%. The involvement of Access Industries and the financial structure could impact the company’s stock performance.

This article was crafted through human expertise and is subject to our Terms & Conditions.

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