On Wednesday, Entravision (NYSE:EVC) Communications (NYSE:EVC) experienced a change in stock rating as EF Hutton adjusted its view on the company from Buy to Hold. Accompanying this downgrade, the firm also slashed its share price target significantly to $1.75 from the previous $8.50. The adjustment follows Entravision's announcement regarding the end of its relationship with Meta Platforms (NASDAQ:META), Inc.
Entravision disclosed that Meta intends to terminate its authorized sales partner program globally, which will affect their partnership by July 1, 2024. This development prompted Entravision to begin reviewing its operating strategy and cost structure. The company has committed to providing updates on its future plans as soon as they are available.
The decision to downgrade Entravision's stock rating was influenced by a reassessment of the company's future earnings potential. EF Hutton cited a revised estimate of Entravision's fiscal year 2024 adjusted EBITDA, accounting for the anticipated loss of revenue related to the Meta partnership. The new price target is based on a valuation multiple of five times the adjusted EBITDA forecast.
EF Hutton's valuation approach places Entravision within the lower range of its peers in the television, audio, and digital marketing sectors. The firm indicated that further guidance from Entravision's management would be necessary to refine cash flow projections and potentially update the discounted cash flow (DCF) model, which could lead to additional adjustments to the price target.
The changes in Entravision's stock outlook reflect the immediate impact of Meta's strategic shift on its business partnerships. Entravision is expected to release more information about its strategic review and cost adjustments in due course, which may further influence analysts' assessments and investor sentiment.
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