Shares of E.W. Scripps spiked 13% in Friday’s extended market trading after the TV station owner disclosed that Warren Buffett’s Berkshire Hathaway has a 24.9% passive stake in the company.
According to an SEC filing, billionaire investor Buffett owns 23.1 million shares of E.W. Scripps (SSP), which are held in the form of a warrant exercisable within 60 days.
Back in September, Buffett agreed to make a $600 million equity investment in E.W. Scripps to help the company buy broadcast network ION Media for $2.65 billion. In exchange, Berkshire received a warrant to purchase 23.1 million in Class A E.W. Scripps shares at $13 a piece. E.W. Scripps shares closed at $14.84 on Friday. ION reaches more than 100 million homes through over-the-air and pay TV platforms.
E.W. Scripps operates a portfolio of 60 stations in 41 markets. The company’s national networks reach nearly every American through the news outlets Court TV and Newsy and other popular entertainment brands, including Grit, Laff and Court TV Mystery.
During an investor presentation in December, E.W. Scripps said that it expects 2020 free cash flow to exceed $280 million, or at least $3.42 of free cash flow per share. Scripps’ pre-pandemic free cash flow guidance was $225-$250 million.
Following SSP’s better-than-expected Q3 revenue, Noble Financial analyst Michael Kupinski reiterated a Buy rating on SSP stock with a price target of $16. The price target implies upside potential of 7.8%.
On the back of stronger-than-expected political advertising and improving advertising trends, Kupinski raised the company’s Q4 revenue estimate from $552.3 million to $563.8 million.
Additionally, the analyst increased the Q4 cash flow estimate from $177.8 million to $190.9 million. The company is scheduled to release quarterly results next month.
He also lifted the full-year 2020 revenue estimate from $1.80 billion to $1.85 billion. (See SSP stock analysis on TipRanks)
Currently, the Street has a bullish outlook on the stock with a Strong Buy analyst consensus backed by 3 Buy ratings. The average analyst price target of $13.50 implies downside potential of 9% to current levels. That’s after shares ballooned 42% over the past three months.