Nine Entertainment's (ASX:NEC) acquisition of QMS Media gives the company exposure to a more resilient advertising medium, outdoor or out-of-home advertising, Jefferies said in a note on Tuesday.
Banking on the deal and streamlining efforts taken by Nine Entertainment, such as the divestment of radio assets and the conversion of its wholly owned regional television station into an affiliate, the investment firm reinstated coverage of the company.
The outdoor industry has seen revenue grow by around 9% over more than a decade, while outdoor ad spending by companies has declined roughly 3.3% year-to-date compared with a 9.2% fall in the broader ad market. Jefferies added that QMS, with its high-quality asset base, offers some buffer against the cyclical nature of the ad market.
In television, Nine Entertainment is seen gaining share as its competitor Seven West Media undergoes structural changes, including a merger with SXL and board changes.
Jefferies brought back its coverage with a buy rating and a price target of AU$1.30.