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Was Lamar's Quarter A 'Head Fake Or Inflection Point'? Morgan Stanley Answers

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Earnings Scheduled For November 6, 2017

In a report published Friday, Morgan Stanley analysts maintained their Equal-Weight rating on Lamar Advertising Co. (NASDAQ: LAMR). The price target was raised from $60 to $62. The analysts believe that the company would be unable to sustain its Q1 strength.

Lamar Advertising posted strong Q1 results, with organic PF revenue growth well above the estimates. Growth occurred at both the local and national levels. The management also noted that national trends were improving marginally in Q2. Overall, the company's performance was in-line with that of its peers in the Outdoor segment.

However, Lamar's management also noted that the overall trends in Q2 were less robust than in Q1, with top line growth expected in the 3-4 percent range. The company maintained its full year PF growth guidance at 2-3 percent.

Despite the Q1 outperformance, Lamar Advertising is currently trading at a meaningful discount to its REIT peers. The broader REIT subsector has underperformed the overall market, year to date, due to concerns regarding rising rates.

"What began the year with rising rates in a strong economy have now shifted towards a fear of rising rates with disappointing economic indicators - a macro backdrop that would be particularly challenging for the two Outdoor REIT's, given their exposure to ad sales and correlation with GDP growth," the analysts said.

Latest Ratings for LAMR

Feb 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight
Dec 2017CitigroupDowngradesNeutralSell
Sep 2017Morgan StanleyMaintainsEqual-Weight

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