Wells Fargo: E. W. Scripps Stock Will Outperform, Worth $26-$29

In a report published Thursday, Wells Fargo analyst Ryvicker initiated coverage of E. W. Scripps Co SSP with an Outperform rating. The valuation has been estimated at $26-$29. E.W. Scripps is a pure play broadcast company run by a professional management and its strengths lie in its exposure to political, spectrum optionality, an investment grade balance sheet and robust free cash flow generation. The company has two well below-FMV retrains contracts with Time Warner Cable Inc TWC and Comcast Corporation CMCSA, inherited via the split with SNI in 2008. "The good news is that TWC will be marked to market at the end of this year while; CMCSA is locked in until YE' 19," analyst Ryvicker mentioned. E.W. Scripps' intense focus on local programming and the optionality that results from both spectrum and M&A are positive features. The company's investment in digital may drive growth over the long run but is currently a drag on its profits. "We like what the company is doing with Newsy, Weathersphere, and WCPO, but it's just too early for us to give credit here," Ryvicker added. In the report Wells Fargo noted, "Post JRN, SSP inherited a radio segment that's approx. 10% of rev. and 14% of EBITDA. It's small, but outperforms the industry and contributes nicely to FCF."