How Will LIN Media (LIN) Stock Respond To This Analyst Downgrade Today?

NEW YORK (TheStreet) -- LIN Media  (LIN) was downgraded to "equal weight" from "overweight" at Evercore Partners (EVR) .

Analysts at the firm lowered its price target to $26 from $28.

Shares of LIN Media closed at $23.55 yesterday.

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Separately, TheStreet Ratings team rates LIN MEDIA LLC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate LIN MEDIA LLC (LIN) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its notable return on equity, revenue growth and compelling growth in net income. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to other companies in the Media industry and the overall market, LIN MEDIA LLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • LIN's revenue growth has slightly outpaced the industry average of 11.9%. Since the same quarter one year prior, revenues rose by 14.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for LIN MEDIA LLC is rather high; currently it is at 56.41%. Regardless of LIN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.00% trails the industry average.
  • LIN MEDIA LLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, LIN MEDIA LLC turned its bottom line around by earning $2.82 versus -$0.36 in the prior year. For the next year, the market is expecting a contraction of 64.9% in earnings ($0.99 versus $2.82).
  • The debt-to-equity ratio is very high at 7.60 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • You can view the full analysis from the report here: LIN Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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