J.P. Morgan analyst Sebastiano C Petti reiterated an Underweight rating on iHeartMedia, Inc (NASDAQ:IHRT).

iHeart announced weaker-than-expected fourth-quarter 2024 results with revenue (+5% versus guidance of high-single-digit growth) and EBITDA ($246 million versus guidance of $290 million) below attributable to lower political and non-political revenue.

Despite the light fourth-quarter trends and soft first-quarter 2025 guidance (revenue down low-single digits), management affirmed its 2025 revenue (flat) and EBITDA ($770 million) guidance.

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While Petti is encouraged by iHeart’s anticipated net cost savings of $150 million in 2025, the analyst noted the company’s 2025 guidance is somewhat optimistic given ongoing secular pressures in broadcast radio, difficult political comps, and gross margin degradation.

Petti now looks for $725 million of fiscal 2025 EBITDA (versus $735 million earlier).

The challenged macroeconomic environment is impacting iHeart revenue as advertising spend slows, which is resulting in margin compression given the company’s high operating leverage despite more resilient digital revenue trends. While iHeart will de-lever, Petti remained wary of the company’s leverage profile, citing the uncertainty in the ad market despite no significant maturities until mid-2026.

Petti projected first-quarter revenue of $791 million and adjusted EPS of $(0.43).

Price Action: IHRT stock is down 9.84% at $1.65 at last check Monday.

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