We have maintained our long-term Neutral recommendation on
leading media and marketing company,
), with a target price of $38.00, following its second-quarter
fiscal 2013 results.
Meredith posted better-than-expected bottom line results for
the second-quarter of fiscal 2013. The quarterly earnings of 89
cents a share came a penny ahead of the Zacks Consensus Estimate
and jumped 27% year over year, owing to strong advertising
revenues along with increased readership.
Total revenue strengthened 10% year over year to $360.6
million. However, it fell short of the Zacks Consensus Estimate
of $373 million.
Meredith has been constantly endeavoring to explore and add
alternative revenue generating channels through acquisitions or
strategic alliances. The company's efforts are paying off as it
marked an improvement in other revenues on account of higher
retransmission revenues during the first half of fiscal 2013.
The company also renewed its long-term affiliation agreements
) Fox Broadcasting Co. Alongside, Meredith is aggressively
expanding its brands through online platforms, televisions,
videos, mobile applications, and broadening its reach of food and
Despite these measures, our primary concern remains the fact
that the company generates more than half of its revenue through
advertising, which in turn depends upon the health of the
economy. The company's National Media Group and Local Media
Group's revenue remain susceptible to changes in advertising
demand with nearly 90% of Local Media Group's revenue coming from
Currently, shares of Meredith retain a Zacks Rank #2 (Buy) as
it continues to focus on bolstering advertising revenue,
primarily in the digital space and enhancing online consumer
transactions, especially magazine subscription orders. Moreover,
the company's focus on brand licensing, marketing services and
e-Commerce is expected to drive revenues.
Other Stock to Consider
Reed Elsevier plc
), which holds a Zacks Rank #2 (Buy), is another media and
marketing company worth considering in the near term.
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REED ELSEVR-ADR (RUK): Free Stock Analysis
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