AMCN Airmedia Grp. ADS, Each Representing Two Ordinary Shares (MM)

AirMedia Group Inc. (AMCN), a premier operator of digital media network in China, has recently updated its guidance for the fourth quarter of 2012. The company presently expects net revenues in the range of $81.0 million to $83.0 million compared to the earlier forecast of $77.0 million to $80.0 million.

The revised revenue guidance translates to a quarter-over-quarter increase of 13.5% to 16.3%, and a year-over-year dip of 2.3% to 4.7%.

AirMedia credits this spike in revenue guidance to its diversified customer base. The company has witnessed an adverse impact on its advertising revenues in the quarter from Japanese brands, particularly from automobile brands, largely due to the anti-Japan protests in China. However, a diversified portfolio and continued growth from other sectors more than offset this decline and induced a positive revision in revenue guidance.  

During the last reported quarter, AirMedia was also able to surpass the high end of its revenue guidance. The company primarily benefited from the stable growth of its digital frames in airports along with its mega-size LED screens, which saw strong demand from advertisers. Going forward, the company envisages mega-size LED screens to form a larger pie of its total revenue to become one of the growth drivers in the coming quarters.

Focusing on mid-to-high-end consumers, AirMedia operates the largest digital media network in China dedicated to air travel advertising. The company operates digital frames and digital TV screens in 34 major airports, including most of the largest airports of the country.

The company also sells advertisement space on the routes of the four largest airlines in China, besides operating traditional media platforms like billboards and digital media like LED screens in selected airports.   

We have a Neutral recommendation on AirMedia, which currently has a Zacks #3 Rank that translates into a short-term Hold rating. We also have a Neutral recommendation and a Zacks #2 Rank (short-term Buy rating) for Clear Channel Outdoor Holdings Inc. (CCO), one of the peers of AirMedia.

 
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