Stock of the day: oOh!media
oOh!media, Australia's largest outdoor media company, faces tough market conditions and shifting trends, leading to a $15 million cost-cut and downgraded earnings expectations.
(AI video summary)
This video was created on 12 December for IG audiences by ausbiz.
ASX code: OML
oOh!media's financial challenges in outdoor advertising
oOh!media, Australia's largest outdoor media company, is facing challenging trading conditions. This has prompted the company to cut costs by at least $15 million.
The company has downgraded its fourth-quarter (Q4) revenue growth and expects underlying earnings for the 2024 calendar year to be between $125 million and $128 million. This is a stark contrast to the broader market's growth, which has been stronger.
Management has acknowledged market share losses, reflecting the difficulties in the outdoor advertising sector.
Structural changes in advertising spend
The shift towards digital and targeted advertising is impacting traditional outdoor advertising. Companies like Nine Entertainment and other multi-channel platforms are capturing advertising spend by offering measurable returns on investment through digital channels such as Google and social media ads.
In contrast, outdoor advertising lacks quantifiable metrics, making it less appealing to management teams that prefer precise control over advertising spend. This structural change presents a significant headwind for oOh!media, despite management's efforts to adapt.
Future outlook and strategic initiatives
Despite the challenges, there is still a place for outdoor advertising, particularly with innovations like remote billboard updates and potential data collection improvements. However, oOh!media's share price has declined, reflecting the current market sentiment.
Investors are urged to be cautious, as the company may face further difficulties if economic conditions worsen. While outdoor advertising might see an uplift during economic booms, potential recession risks make it a less attractive investment at present.
As a result, analysts suggest selling the stock, as it is better to keep oOh!media on a watchlist until conditions improve.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Explore the markets with our free course
Learn how shares work – and discover the wide range of markets you can trade on – with IG Academy's free ’introducing the financial markets’ course.
Put learning into action
Try out what you’ve learned in this shares strategy article risk-free in your demo account.
Ready to trade shares?
Put the lessons in this article to use in a live account – upgrading is quick and easy.
- Trade over 16,000 popular global stocks
- Protect your capital with risk management tools
- React to breaking news with out-of-hours trading on 70 key US stocks
Inspired to trade?
Put your new knowledge into practice. Log in to your account now.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
