- Needham analyst Laura Martin reiterates Stagwell Inc STGW with a Buy and a $9 price target.
- STGW reported 4Q22 GAAP revenue of $708.2 million, net revenue of $583.4 million, operating income loss of $(13.8) million, adjusted EBITDA of $123.3 million, and adjusted EPS of $0.22.
- The analyst highlighted that STGW has essentially finished building its infrastructure through the eight companies it purchased in 2022, many of them via earn-outs.
- In 2023, Martin noted that STGW would buy products to plug into these infrastructure investments. Since marginal returns on capital should be very high for these add-on products, it will pivot to paying cash upfront, with no upside participation for the sellers.
- STGW expects cash payouts related to prior acquisitions to be $60 million in 2023, down from $72 million in 2022 and expects these payments to be trivial starting in 2024.
- On March 1, 2023, the STGW board authorized an additional $125 million increase in its share repurchase program, totaling $250 million.
- The CEO stated on the call that he would spend much of his time in 2023 on expanding STGW's Cloud business and assets.
- STGW believes it is gaining market share vs. its ad agency competitors because it is more digital than those competitors.
- STGW's 2023 guidance is for 10%-14% net revenue growth, ex advocacy, adjusted EBITDA of $450-$490 million, FCF conversion from EBITDA of 50%-60%, and adjusted EPS of $0.90-$1.05. Including advocacy, they expect 7.5%-10% Y/Y revenue growth in 2023.
- Price Action: STGW shares traded higher by 8.25% at $8.21 on the last check Friday.
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STGWStagwell Inc
$4.45-%
Edge Rankings
Momentum
11.81
Growth
Not Available
Quality
Not Available
Value
35.15
Price Trend
Short
Medium
Long
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