On Monday, Citi revised its stock price target for RTL Group SA (RTL:BB) (OTC: RGLXY), a media company operating across various platforms and markets, lowering it to €40 from the previous €51. Despite the reduction, Citi maintained a Buy rating on the stock.
Citi's reassessment of RTL's price target comes amid a recognition of the company's inherent complexity, which often poses challenges for investors trying to discern specific investment themes. Still, Citi anticipates a favorable alignment of key themes for RTL Group as the year progresses.
The investment firm forecasts strong trends in both linear and non-linear advertising revenues in the first half of 2024, bolstered by unique events, favorable year-over-year comparisons, and an improving macroeconomic environment. Moreover, Citi believes that 2024 will represent a peak in streaming investment for RTL Group, with expectations for returns to begin improving in the second half of the year.
Citi also points to a potential inflection point in RTL Group's multi-year content production investment, which is likely to be reflected in enhanced margins. The possibility of a significant cash return following the sale of RTL Nederland adds to the attractiveness of the stock. Citi estimates that a nearly €7 dividend could be payable in 2025.
The investment firm's commentary underscores a period of alignment in RTL Group's operations that could present a favorable risk/reward scenario for investors, despite the lowered price target.
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