Citigroup downgrades radio station operator Citadel Broadcasting (CDL) to sell from hold.
Analyst Eileen Furukawa says she initiated coverage of the Broadcasting Sector yesterday with Clear Channel as a top pick. Today's action is to swap out of Citadel and into Cumulus.
She says while both companies have historically focused on smaller sized markets, which provide more viable accretive acquisitions and margin expansion opportunities, they now differ in two key ways.
On valuation, Cumulus trades at a 13% discount to group and Citadel trades at a 20% premium. Also, Citadel could enter into a "pricey", potentially near-term dilutive acquisition, which could weigh on its stock.