Nine Entertainment Co Holdings Ltd (ASX: NEC) shares are on the move this morning after the company released a revised trading update. At the time of writing, the Nine share price has surged 4.26% higher to $2.45 on news the company now expects its first-half earnings to come in at 40% growth, compared to the previous guidance of 30%.
What’s moving the Nine share price?
Investors are driving up the Nine share price after the company reported its trading outlook has improved since holding its annual general meeting (AGM) in mid November.
Nine reported that, during the AGM, it advised expected first half earnings before interest, tax, depreciation, and ammortisation (EBITDA), before specific items, to be up by around 30%.
Since that time, Nine says trading conditions have continued to improve, with EBITDA before specific items for the six months to 31 December, now expected to be up by more than 40%, on the same basis.
Of particular note, Nine’s December quarter is now expected to show growth in metropolitan free-to-air advertising revenue of almost 20% (previously around 15%). This means the company‘s metropolitan TV advertising revenues in the December half are now expected to be up by around 1% on the prior corresponding period.
Nine also advised that, given limited visibility of the second half advertising market, it is not in a position to provide guidance on earnings for the full year. The company does, however, expect to be in a better position to address this at the half year results release in February.
More about Nine Entertainment
Nine owns some of Australia’s well-known media brands including The Australian Financial Review, the Nine Network, and the Domain platform.
According to its financial report, Nine generates 90% of its earnings from its Nine Network channel – one of only three metropolitan television channels licensed to broadcast free-to-air in Australia. The total market for free-to-air advertising is $2.7 billion, of which Nine commands the number one position at 39%.
Analysts have said that this market is gradually dwindling as advertisers move to digital platforms. However, management said Nine’s investments in digital platforms such as 9Now, Stan, and Domain had gradually increased its market share in the fragmented digital market. This is where the company expects to derive its future growth.
The Nine share price performance in 2020
The Nine share price has been on the rise in 2020, gaining around 35%, after having fallen as low as 84 cents during the March crash. Nine shares reached a 52-week high of $2.59 in November.
The company commands a market capitalisation of $4 billion.
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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