Nielsen Holdings Stands Tall on Strong Growth Projections

Nielsen Holdings PLC (NYSE: NLSN) slipped almost 7% on Monday after the company rejected an over $9 billion takeover offer from a private equity consortium on Sunday. The stock continued to drop and opened 4.7% lower in the pre-market session on Tuesday.

The consortium, which included New York-based investment management firm Elliott Management, had offered to pay $25.40 for each share of Nielsen. The company’s board said the offer undervalues Nielsen significantly.

One of the largest shareholders of the company, Texas-based investment firm WindAcre Partnership supports Nielsen’s decision to reject the offer. WindAcre owns a 9.6% stake in Nielsen. The shareholder also has an economic exposure of another 14.4% in Nielsen via swaps.

WindAcre believes the company has an intrinsic value of more than $40 per share, which is way higher than the consortium’s offer price.

Snehal Amin, the Managing Partner of WindAcre, said, “Nielsen is, and we believe will continue to be, the currency for the video advertising ecosystem. Advertisers need the truth about who is watching their advertising across all screens and all platforms, and only Nielsen ONE has the promise to deliver that.”

Meanwhile, according to data from Refinitiv, Elliott holds a 4.6% stake in the marketing data provider.

NLSN stock had gained 30.1% on March 14 after The Wall Street Journal (WSJ) reported that the consortium was in late-stage talks to acquire Nielsen for around $15 billion, including debt.

Following the WSJ report, Robert W. Baird analyst Jeffrey Meuler said, “The company previously ran an elongated strategic review.”

“Nielsen’s low valuation multiple, good growth implied by 2022 guidance, and the Buy/Connect sale and associated deleveraging may improve its sale prospects,” Meuler added.

Headquartered in New York, Nielsen provides marketing data collection and analytics services across the world. It has a team of nearly 44,000 people working in more than 100 nations.

The company collects data about what consumers watch and buy and offers this consumer behavior and marketing information to its clients in the form of ratings.

Last month, Nielsen reported mixed results for the fourth quarter and full-year 2021. It also issued guidance for full-year 2022 and announced a share repurchase plan of $1 billion. Let us have a look at the company’s financials.

Q4 Results

Adjusted EPS stood at $0.46, higher than analysts’ expectations of $0.35 and the year-ago figure of $0.32.

Adjusted EBITDA declined 7.6% year-over-year to $351 million, and adjusted EBITDA margin fell 432 basis points to 39.3%.

Revenues increased 2.5% year-over-year to $894 million, marginally missing the Street’s estimate of $898.13 million.

Measurement revenues jumped 3.7% to $647 million, driven by strength in national and digital measurement products. However, Impact/Content revenues decreased 0.4% to $247 million.

Full-Year 2021 Results

Adjusted earnings came in at $1.81 per share, compared to $1.45 per share in full-year 2021.

Adjusted EBITDA rose 5.7% year-over-year to $1.49 billion and adjusted EBITDA margin went up 62 basis points to 42.6%.

Total revenues grew 4.1% to $3.5 billion; Measurement revenues totaled $2.5 billion, up 3.7%; and Impact/Content revenues increased 5.4% to $955 million due to recovery in the Sports segment, growth in Content and higher short-cycle revenues.

CEO’s Comments

Nielsen’s CEO David Kenny said, “We delivered strong results in 2021. We successfully sold Nielsen Global Connect, hit significant product milestones, and exceeded all of our original 2021 guidance metrics despite facing some unanticipated challenges. We are strongly positioned within the media ecosystem, with growing relevance as audiences shift to streaming, and we are delivering value to clients across our three essential solutions.”

“We made measurable progress toward becoming a digital-first company, and our strategy aligns with where growth in the industry is coming from. We are piloting the first iteration of Nielsen ONE, which we launched in January, with a representative group of clients across media buyers and sellers and feedback has been positive,” he added.

2022 Guidance

For full-year 2022, Nielsen expects adjusted EPS to range from $1.81 to $1.91. Total revenues are projected to grow in the range of 3.5% to 4.5% on a constant currency basis, while analysts expect the company to report revenues of $3.63 billion.

Adjusted EBITDA margin is likely to come in the range of 42.6% to 42.9%.

Price Target

Based on one Buy, four Holds and two Sells, Nielsen has a Hold consensus rating. The average NLSN price target of $20.86 implies 8.4% downside potential from current levels. Shares have gained 17.3% year-to-date.

Positive Investor Stance

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Nielsen, with 24.2% of investors on TipRanks increasing their exposure to the stock over the past 30 days.

Positive Hedge Fund Trading Activity 

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Nielsen is currently Very Positive, as the cumulative change in holdings across all six hedge funds that were active in the last quarter was an increase of 2.1 million shares.

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