J.P. Morgan analysts downgraded the stock Wednesday, saying that the company's Q1 guidance is reflective of an 'uncertain macro environment.'
The J.P. Morgan analysts expect these headwinds to persist throughout 2023, with the lower revenues weighing on the company’s margins due to iHeartMedia’s high operating leverage, with $5.4 billion of debt, as well a shift towards lower margin podcast and digital advertising rather than high-margin broadcast radio revenue.
B. Riley analyst Daniel Day said the lower first-quarter revenue guide suggests “national ad spend has taken another leg down following the initial pullback last summer, partially due to advertisers being conservative with budgets early in the year.” He also noted that podcasting is not immune from the advertising downturn, with the segment seeing 17 percent year-over-year growth compared to the 130% year-over-year growth posted in the fourth-quarter of 2021 .
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