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July 01, 2008
Ad Forecast Good News for CETV
Yesterday, I noted that Zenith Optimedia raised its global ad forecast for 2008 due to strength in developing markets. Central and Eastern Europe was one of the regions with particularly good growth for 2008, with a forecast of 17%. With growth in CEE markets holding steady despite some initial impacts from the global credit and inflation issues, I remain quite bullish on Central European Media Enterprises (CETV), which I have been adding to on its current pullback.
CETV has had a positive tone in marketing presentations to investors in the US over the past few weeks. In addition, one of my best contacts recently visited company operations in several Central European countries and came away quite confident about the pace of business. I think 2Q results will be quite favorable and place the company on a trajectory to beat its full year guidance. However, I don’t expect guidance to be raised until the annual analyst meeting which takes place each fall. This year the meeting is in NY.
Also, of interest to CETV investors will be yesterday's announcement of the closing of the deal to up its stake in its Ukrainian operations from 60% to 90%, and importantly, gain full management control....
....The deal should close imminently and sometime in the next few months CETV will provide a detailed multiyear forecast for Ukraine. I expect the numbers to be impressive particularly after 2009 as the first year plus of management control will have heavy investment. If prior control acquisitions/strategies in Slovakia and the Czech Republic are any indication, the outlook in Ukraine will be bright and investor confidence in meeting the multiyear goals should be high.
Posted by Steve Birenberg at July 1, 2008 04:21 PM in CETV
SOME OBSERVATIONS:
1.COMMODITIES/OIL SEEM TO BE CORRECTING
2.RUT APPEARS TO BE AT THE BOTTOM OF ITS RANGE/HOLDING UP BETTER AND MAY BE A BETTER INVESTMENT AT THIS POINT
3. FINANCIALS /XLF MAY SHORT TERM BE A GOOD INVESTMENT AT THIS TIME
THE MARKET APPEARS TO BE FORMING SOME KIND OF BOTTOM AT THIS TIME AND TO BE ROTATING SECTORS.
DO YOU THINK IT MAY BE TIME TO SELL SOME PORTION OF COMMODITIES ,ENERGY ETC. AND TO BE BUYING RUT,XLF ETC? DO YOU HAVE ANY THOUGHTS IN GENERAL IN THIS REGARD? DO YOU HAVE ANY SIMILAR THOUGHTS WITH REGARD TO THE MEDIA STOCKS IN PARTICULAR?
I think there is some room in the commodity/energy correction. Not because fundamentals have deteriorated but rather because things were overdoen in the stocks. Look how far the 1Q correction took down Apple when it went out of favor. I think a similar dynamic could take place.
Financials have room to recover more as long as the news flow remains no worse than expected. I think the upside is limited however because earnings power is challenged due to lack of lending demand.
Media stocks as a group need some good news on advertising to get moving. Individual stocks with less or no exposure to advertising are best for now. CETV is pressured as other ad supported stocks crater bringing down the multiple even as the premium holds.
Posted by: Steve at July 18, 2008 07:41 AM