SCA: A buy on ASX?

While the SCA AGM delivered some not so good news with the group forecasting an 18-20% revenue decline and with that, the SXL share price took a hammering.

Now that the dust has settle a little, it appears that some market analysts are thinking the worst may be over for SCA seeing revenue growth return in September.

The Australian Financial Review today quoted Daniel Blair from CIMB saying:

 “We continue to like radio from a structural perspective, and while [Southern Cross] must continue to execute, we do see signs of operational improvement, albeit it is not yet evident in the financial results,”

With that AFR reported that CIMB maintained its “add” rating for Southern Cross.

Meanwhile they also reported that Macquarie analysts have a neutral position on Southern Cross Austereo stock. Reporting that Macquarie cut their 12 month target prices for SXL stock by 20 cents a share to $1.00, still above current price of about 86 cents.

AFR reported:

“This target price does not incorporate any upside from corporate activity, which could be a positive for shareholders if the regulatory environment were to allow it,” Macquarie analysts said in a note to investors. The investment bank said while lower earnings meant higher gearing ratios, Southern Cross had the capacity to extend its net debt and reinvest in the business. “To approach its covenants in FY15 . . . we estimate that SXL’s EBITDA would need to fall in the vicinity of 25 per cent across the year.” 

You can read more in the Australian Financial Review here.