Salem margins to significantly improve with sales, says Noble Capital

Noble Capital believes Salem Media’s new $26M credit facility with Siena Lending Group “allows some financial flexibility” as the company works to close on the sale of its Church Publishing division. The sale of Salem Church Products business to Gloo for $30M has been somewhat delayed, but is still on track to close imminently, and the proceeds will be used to largely pay off the company’s revolver, providing further financial flexibility, the analyst tells investors in a research note. The firm believes Salem’s recent unit sales items enhance its investment profile for 2024. The company should significantly improve margins in 2024 through the sale of money losing or low margin business and real estate and through recent cost cutting actions, contends Noble. In addition, the firm believes the fundamental environment for its remaining businesses should improve in 2024 as well. The shares do not appear to reflect these improvements, contends Noble, which keeps a Buy rating on the stock with a $4.25 price target.