We have maintained our long-term Neutral recommendation on
) with a target price of $50.00.
Why the Reiteration?
Meredith boasts a strong portfolio of women's magazines, which
helps it gain market share. The company remains focused on
bolstering advertising revenues, primarily in the digital space
and is laying more emphasis on brand licensing, marketing
services and e-Commerce to make it less susceptible to economic
Meredith also remains a perfect bet for investors who are
seeking both growth and income. The company through its TSR
(Total Shareholder Return) strategy intends to boost
shareholders' value through dividends, share repurchases and
strategic investments in business to drive growth.
The company has a strong history of making dividend payouts
for 66 consecutive years. Over the last decade, the company has
boosted its dividend at an average annualized rate of 16% and
raised dividend annually for 20 straight years.
Moreover, the company constantly endeavors to explore and add
alternative revenue generating channels through acquisitions or
strategic alliances, which supplements its sales. Meredith
extended its contract with
Wal-Mart Stores Inc
) through 2016, which includes an expansion of the Better Homes
and Gardens branded home decor and garden program at Wal-Mart
stores across the United States and Canada.
Alongside, this Zacks Rank #2 (Buy) stock renewed its
long-term affiliation agreements with
). We believe these measures will help the company in reducing
its dependency on traditional advertising and provide ample
growth opportunities to increase its revenue generating
capabilities, thereby driving profitability.
However, Meredith generates significant revenues from
advertising, which makes it vulnerable to the changes in
advertising demand. Moreover, secular headwinds remain a matter
of concern for the company in the near-term. Consequently, we
maintain our Neutral recommendation on the stock.
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