Nine Entertainment (ASX:NEC) is positioned for 2% to 5% annualized adjusted earnings per share growth over the next three years, with growth in Stan and QMS expected to offset structural weakness in broadcasting and publishing, Jefferies said in a Wednesday note.
Jefferies said Stan and QMS now account for 62% of the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) before corporate costs.
The investment firm noted that July Standard Media Index data showed metro free-to-air TV advertising fell 4.1% year over year, while newspaper advertising declined over 16%, offset by a 1.6% rise in outdoor advertising, including a 7.1% increase in QMS billboards.
QMS revenue is forecast to grow 16% in fiscal 2027, supported by new sites and contract wins, with additional upside from Chinese electric vehicle advertising, Metcash's retail-media rollout and cross-selling opportunities.
Jefferies sees upside for Stan from a full second season of Premier League content, subscriber growth, recent price increases and the launch of its new ad-supported tier, with potential further gains from higher average revenue per user and advertising revenue.
It highlights upside in broadcast video on demand and publishing, while keeping fiscal 2027 to fiscal 2029 EBITDA broadly unchanged and lifting fiscal 2027 net profit after tax 18% after adding back amortization of acquired intangibles.
Jefferies reaffirmed a buy rating on Nine Entertainment with a price target of AU$1.40.