Benchmark cuts TEGNA stock price target to $21, maintains buy rating

On Monday, Benchmark analyst Daniel Kurnos adjusted TEGNA Inc.'s (NYSE:TGNA) price target to $21 from the previous $23, while still endorsing the stock with a Buy rating. According to InvestingPro analysis, TEGNA appears undervalued at its current price of $17.83, with the stock showing a strong 29.12% price return over the past six months. Kurnos noted that TEGNA's new CEO, Mike Steib, faces the challenge of reassuring employees and investors of the company's prospects, particularly with the upcoming fourth-quarter earnings report set to be released before the market opens on Thursday, February 27, 2025.

Kurnos pointed out that Steib is taking over at a time when TEGNA is experiencing several difficulties. Among these are slower growth at Premion, its over-the-top advertising service, and a national advertising market that is not showing signs of improvement. While revenue declined 4.67% in the last twelve months, the company maintains strong fundamentals with a healthy P/E ratio of 6.31 and an impressive free cash flow yield of 19%. Additionally, there is a concern that subscription growth may not see an uptick for the second year in a row, following an anticipated 5% decline in 2024.

Despite these challenges, there may be a silver lining, as Premion seems to be improving, and there are positive initial signs in subscriber numbers and network compensation. These factors could contribute to a more favorable outlook for TEGNA as it focuses on growth initiatives. The company's financial health score on InvestingPro is rated as "GREAT," supported by its consistent dividend payments for 55 consecutive years and recent dividend growth of 9.89%. Furthermore, the company is undertaking several cost-cutting measures that could potentially enhance its financial narrative as 2025 unfolds.

TEGNA's leadership transition and strategic efforts come at a critical time for the company. With the fourth-quarter earnings on the horizon, stakeholders are looking for signs that TEGNA can stabilize and build upon its core business areas despite the broader industry headwinds. For deeper insights into TEGNA's financial health and growth prospects, investors can access the comprehensive Pro Research Report available exclusively on InvestingPro, which includes detailed analysis of the company's valuation metrics and growth potential. The management's ability to execute growth and cost-efficiency strategies will be closely monitored in the coming months.

In other recent news, TEGNA Inc. announced a quarterly dividend of 12.5 cents per share, payable on April 1, 2025, to shareholders on record as of March 7, 2025. This move is part of TEGNA's ongoing strategy to provide returns to its investors while maintaining financial stability. Additionally, Guggenheim has maintained its Buy rating on TEGNA, setting a price target of $22.00. Despite revising its revenue forecast for 2025 down to $2.76 billion from $2.85 billion, Guggenheim remains positive about TEGNA's strong financial position and potential for future growth. The firm also adjusted its EBITDA expectations to $610 million from $687 million. TEGNA plans to return a significant portion of its free cash flow to shareholders through dividends and stock buybacks, aiming to distribute between 40% to 60% of its FCF over the next two years. In governance news, Karen Grimes, a member of TEGNA's Board of Directors, announced her retirement and will not seek re-election at the 2025 annual meeting. Her departure is not due to any disagreements with the company's operations or policies.

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