Deutsche Bank Raises RTL Group Share Target on Strategic Acquisitions Via Investing.com

On Monday, the price target for RTL Group SA (RTL:BB) (OTC: RGLXY) shares increased by German bank (ETR:) from EUR 35.00 to EUR 36.00, while maintaining the Hold recommendation for the stock. The adjustment comes as the RTL Group continues to diversify its operations and strengthen its core business through strategic acquisitions and sales.

RTL Group, known for being one of Europe’s most diversified free-to-air broadcasters, also owns a significant content business with Fremantle and is expanding its subscription-based streaming services.

The company is focused on strengthening its RTL DE and Fremantle brands through the acquisition of additional companies, as well as the sale of non-essential broadcasting assets.

Last year, RTL Group announced the sale of RTL Nederland to DPG Media for €1.1 billion, representing approximately 7.6 times expected 2023 EBITA. The group indicated that the profits from these sales will be distributed in the form of a dividend in the coming year, which could result in an increase in return of around 4 euros per share, or approximately 13%.

The completion of the transaction with RTL Nederland is pending approval by the Dutch competition authorities, who are currently conducting the second phase of their investigation. A decision is expected by the end of the year.

The Deutsche Bank analyst emphasized that although the RTL Group is making the right strategic moves, the initial costs related to streaming investments, estimated at approximately EUR 200 million in startup losses for 2024, along with the financial effects of mergers and acquisitions, may temporarily affect the group’s profitability.

In other recent news, Citi revised its target price on shares of media company RTL Group SA, lowering it from €51 to €40. Despite this reduction, Citi maintained its Buy rating on the stock.

This re-rating is due to the company’s inherent complexity, which may pose challenges for investors. However, Citi anticipates favorable alignment of key themes for the RTL Group as the year progresses.

The investment firm forecasts strong trends in both linear and non-linear advertising revenues, boosted by exceptional events and an improving macroeconomic environment. Moreover, Citi suggests that 2024 could be a peak year for streaming investments for RTL Group, with returns expected to increase in the second half of the year.

Citi also highlights a potential turning point in RTL Group’s multi-year investment in content production, which is likely to increase margins. The potential for a significant cash return following the sale of RTL Nederland makes the stock more attractive, and Citi estimates that a dividend of almost €7 will be paid in 2025. Here are the latest events around RTL Group SA.

InvestingPro Insights

Understanding the financial health and market position of RTL Group SA (OTC: RGLXY) can provide investors with a clearer picture of its potential. According to InvestingPro, RTL Group boasts high shareholder returns and is currently trading close to its 52-week low, which may be of interest to value-seeking investors. Additionally, the company’s cash flow is reported to be more than adequate to cover interest payments and its liquid assets exceed its short-term liabilities, indicating a solid financial structure.

From a valuation standpoint, RTL Group has a market capitalization of $5.08 billion and operates with a moderate level of debt. With a P/E ratio of 13.17 and an adjusted P/E ratio for the trailing twelve months from Q4 2023 of 12.8, the company presents an interesting profile for those looking at traditional valuation metrics. Moreover, the dividend rate as of mid-April 2024 is at an attractive level of 5.89%, despite the decline in dividend growth in the previous twelve months. Investors should note that analysts expect RTL Group to be profitable this year, as it has been over the last twelve months.

There are additional insights for those interested in further insights InvestingPro Tips which could provide more detailed investment guidance. With the current price below InvestingPro’s fair value estimate of $4.04, RTL Group could be primed for a rebound. For deeper analysis, investors can use the coupon code PRONEWS24 to get an additional 10% off your 1- or 2-year Pro and Pro+ subscription, which includes access to comprehensive real-time guidance and metrics.

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