(BFM Bourse) – The Oddo BHF research office on Tuesday raised its recommendation on the audiovisual group to “outperformance”, equivalent to “buy”. Oddo BHF has raised its forecasts and advertising expectations, counting on a ramp-up of the new TF1+ digital offering.
TF1 had warned that if his marriage with M6 failed, he had “a plan B”. A little over a year after the two audiovisual groups had to abandon their union, due to lack of approval from regulators, the group led by Rodolphe Belmer is rolling out this strategy.
For example, the company is tightening its costs, unveiling “an optimization plan” last year to generate 40 million euros in operational cost savings by 2025, at an annual rate. This involves, for example, grouping staff within the same building.
This plan is not limited to costs, TF1 having also warned that 10 million to 15 million euros of savings would be reinvested in a “digital acceleration” plan. Rodolphe Belmer even affirmed, in February 2023, that he wanted to establish the company as “the first French free streaming platform”.
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“Top chrono” and “synchro”
Actions have since followed words. On January 8, TF1 launched TF1+, its new free streaming platform, with more than 15,000 hours of content. This streaming service also promises some innovations, such as “top chrono”, which offers tailor-made summaries of sporting events. Or even “synchro”, which, in March, will offer users multi-player programs selected according to the profiles of different users wishing to view content together.
Oddo BHF is convinced by this platform, and this Tuesday raised its advice on TF1 from “neutral” to “outperformance”, thereby increasing its price target to 13 euros compared to 10 euros previously.
Which allowed TF1 shares to jump: the stock rose 8.3% around 2 p.m. Remember that the Oddo BHF analyst in charge of the file, Jérôme Bodin, regularly ranks among the top places in the ranking of the best French analysts from II Research (formerly Extel). During the last edition on September 6, 2023, it reached first place according to L’Agefi, as in 2022.
The analyst therefore justifies his recommendation increase on TF1 by earnings per share estimates for the 2023-2025 period increased by an average of 10%. These new forecasts are themselves due to higher advertising expectations, thanks in particular to “the rise in power of TF1+”.
TF1+, a “break”
In detail, Oddo BHF expects average annual advertising growth of 1.9% between 2024 and 2026, while the financial intermediary previously anticipated stagnation. This forecast “is based on the stability of linear antennas” (i.e. television watched live), the drop in listening time being offset by an increase in prices, develops the research office. But, at the same time, Oddo BHF anticipates a “strong increase” in activity coming, therefore, from TF1+.
“We consider this launch as a breakthrough which should lead to a turnover multiplied by 2.6x by 2026 in this segment (i.e. an increment in turnover of around 150 million euros). The news platform seems very attractive to us and should make it possible to generate a first-line audience and more simply catch-up consumption only as was the case with MyTF1″, develops the financial intermediary.
Other arguments are put forward by Oddo BHF. Newen, a TF1 subsidiary specializing in audiovisual production and distribution, is expected to have had a difficult year in 2023, with a 23% drop in the figure expected by the research office last year. But the financial intermediary is counting on a rebound of 15% this year, “driven by the relaunch of production of a flagship series (“Plus belle la vie”) but also by several major orders from the group’s historic clients. including the Canal group”, he explains.
TF1’s strict cost control also leads Oddo BHF to expect an operating margin of 15.8% for the “media” division compared to 13.3% in 2023. This is based on an increase in the cost of the schedule. , due to the rise in power of TF1+, but also, at the same time, a reduction in other costs, particularly structural, thanks to the 40 million euro savings plan. “One of the key points is the strong pooling of the program cost base between the linear antennas and TF1+,” underlines Oddo BHF.
The financial intermediary notes in passing that the group has “a very healthy balance sheet”, with a net cash position of 510 million euros expected at the end of 2024, or around 30% of the market capitalization.
Julien Marion – ©2024 BFM Bourse
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