Investors are expressing significant concern following Nine Entertainment Co Holdings Ltd’s (ASX: NEC) latest financial results and future outlook. The company’s share price has nosedived by 10.46%, currently trading at $1.6475 per share. Despite an overall increase of 22.04% in share price over the past year, this recent downturn reflects investor anxiety over the company’s fiscal health and strategic direction.
The sharp decline in share price comes in the wake of Nine Entertainment’s FY25 results, released yesterday. The company reported a modest 2% increase in revenue, but this was overshadowed by a 6% drop in EBITDA, a 10% decrease in net profit after tax (NPAT), and a 12% fall in net profit after tax and minorities. Additionally, fully diluted earnings per share (EPS) dropped by 10% to 10.5 cents per share compared to FY24.
Macquarie’s Cautious Stance on Nine Entertainment
In response to these results, Macquarie Group Ltd (ASX: MQG) has maintained a neutral stance on Nine Entertainment’s stock. The firm has slightly adjusted its target price to $1.25, which suggests a potential 24.1% downside for investors over the next year. According to Macquarie, the target price is based on a valuation of 5.5x EV/EBITDA, excluding Domain Holdings Australia Ltd (ASX: DHG), and 14.5x 12-month forward P/E.
“Target price = A$1.25/sh, implying 5.5x EV/EBITDA (vs. 4.5x avg excl Domain recently) and 14.5x 12-month forward P/E. This excludes the A $0.49/sh special dividend (A$0.70/sh with franking benefits) with an ex-date of 11 September 2025,” Macquarie noted.
Macquarie also highlighted Nine Entertainment’s potential for mergers and acquisitions, which could diversify its earnings away from the structurally challenged broadcast and publishing sectors. However, the broker estimates the fair value of the stock to be between A$1.74 and A$1.95 per share, including the Domain special dividend and franking benefits.
Future Outlook and Challenges
The brokerage has revised its earnings per share (EPS) forecasts downward by 29%, 35%, and 33% for FY26, FY27, and FY28, respectively. This adjustment follows the company’s recent financial disclosures and reflects ongoing challenges in the media sector. Macquarie anticipates flat EBITDA and NPAT for FY26, excluding Domain Holdings, as the company cycles the benefits of the Olympic Games in the first half of the year amidst difficult market conditions.
Macquarie’s analysis suggests that the publishing arm of Nine Entertainment will continue to face obstacles due to the structural decline in print media and rising costs. However, there is optimism surrounding Stan, Nine’s streaming service, which is expected to grow following the acquisition of Optus Sport in August 2025. This acquisition is seen as a strategic move to enhance product offerings and justify higher pricing without significant customer churn.
Ad Spend and Market Dynamics
The advertising spend is identified as a critical factor for Nine Entertainment’s performance in FY26. Macquarie is closely monitoring this metric on a monthly basis, given its significant impact on the company’s revenue streams. The broader media landscape remains challenging, with traditional media companies grappling with digital transformation and changing consumer behaviors.
Implications for Investors
The recent developments at Nine Entertainment underscore the volatility and uncertainty facing media companies in the current economic climate. As the industry continues to evolve, investors are advised to remain cautious and consider the broader market dynamics when making investment decisions. The company’s strategic initiatives, including potential mergers and acquisitions, will be crucial in determining its future trajectory.
Looking ahead, Nine Entertainment’s ability to navigate these challenges and capitalize on growth opportunities in the digital space will be pivotal. Investors and analysts alike will be watching closely to see how the company adapts to the rapidly changing media environment and whether it can deliver sustainable value to its shareholders.
