Expect a lukewarm Q4 from Corus, says Cannaccord Genuity’s Galappatthige

Canaccord Genuity analyst Aravinda Galappatthige says he will be watching closely for a recovery in Corus Entertainment’s  children’s TV advertising, which has been characterized by steep declines in the past two years.

Cannaccord Genuity analyst Aravinda Galappatthige says he expects a fairly flat Q4 from Corus Entertainment (TSX:CJR.B), but will be watching the company’s efforts in children’s TV advertising closely.

On October 24th, Corus will release its fourth quarter and year-financial results. The numbers will follow on a Q3 in which Corus posted revenue of $200.1 million, which was down 2% from the $204.1-million topline the company posted in the third quarter of last year.

Galappatthige says anticipated weakness in Corus’s radio business and Nelvana should be offset by strength in the company’s core TV holdings and its ability to lower its corporate costs. One thing the Canaccord Genuity analyst will be watching closely for is a recovery in children’s TV advertising, which has been characterized by steep declines in the past two years.

Corus’s kids brands include YTV, Treehouse, Nickelodeon (Canada), and it owns 50% of TELETOON and TELETOON Retro.

Galappatthige expects Corus will earn $0.42 per share on revenue of $197.1-million in its fourth quarter, with EBITDA of $61.5-million. His expectations are basically in line with the street consensus, which has the company earning $0.39 on a topline of $196.5-million.

In a research update to clients this week, Galappatthige maintained his HOLD rating on Corus Entertainment, but raised his one-year price target on the stock to (C) $23.90, up from his previous target of $21.50. The Cannacord Genuity analyst says the reason for the bump is that he is rolling forward his valuation from 2014 to 2015 forecasts. He arrived at the new price, he explains, by applying an 8.5x EV/EBITDA multiple to his 2015 estimates.

At press time, shares of Corus were down .6% to $24.59.

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