Nexstar (NXST) Soars 5.5%: Is Further Upside Left in the Stock?
Nexstar Broadcasting Group (NXST) shares soared 5.5% in the last trading session to close at $155.10. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 4.6% loss over the past four weeks.
Continued strength in audience viewership on Nexstar’s channels boosted by coronavirus-led social distancing and work-from-home norms and improved advertising revenues primarily drove the stock higher.
The company has been benefiting from strong advertising rebound across station footprint, most notably in sports programming besides auto, the company’s largest category, which represented 18% of total local and national advertising revenues in 2020.
Moreover, post the completion of Tribune Media acquisition deal, Nexstar has become one of the largest television broadcasters in the United States.
This television broadcaster is expected to post quarterly earnings of $3.60 per share in its upcoming report, which represents a year-over-year change of +69%. Revenues are expected to be $1.12 billion, up 22.8% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For Nexstar, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on NXST going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
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