Urban One Inc (NASDAQ: UONE) is the US-based multimedia company focusing on urban base. The Company was earlier named as Radio One Inc.

Investment Highlights - Urban One Inc – Avoid at USD 5.99

• The Company had anticipated a year-on-year revenue decline ranging from negative 13.7% to negative 14.6% for FY20.
• The radio segment had witnessed a revenue decline of 58.4% during Q2 FY20 and 31.9% during Q3 FY20.
• From a technical standpoint, the Company is trading lower than the 200-day simple moving average of USD 6.46, which indicates further downside potential of the stock.

Key Risks

• The Covid-19 pandemic may result in reduced activity levels and postponement of projects.
• The Company is exposed to financial risk regarding interest rate fluctuations.

Recent Developments

On 08 January 2021, the Company announced that it had priced an offering of USD 825 million through senior secondary notes in aggregate principal amount of 7.375%.

Financial Highlights (Preliminary FY20 results ending 31 December 2020, as on 07 January 2021)

• The Company had anticipated consolidated net revenue in the range from USD 373.0 million to USD 377.0 million during FY20 compared to USD 436.9 million during FY19.
• Similarly, the Company had projected consolidated adjusted EBITDA to fall in the range from USD 137 million to USD 139 million.
• The adjusted EBITDA for the digital segment is expected to be at least USD 4 million during FY20.
• The Company had estimated its cash and cash equivalent to be in the range from USD 70 million to USD 73 million as of 31 December 2020.

One Year Share Price Chart

 (Source: Refinitiv, chart created by Kalkine Group) 

Conclusion

The Company had signed definitive asset exchange agreement with Entercom Communications Corp where the Company would receive several Charlotte stations with subject to approval from Federal Communications Commission. The Company had planned to raise USD 825 million and would utilize the net proceeds towards repayment of outstanding loans. The radio segment was boosted by political advertising expenditure targeting Black American voters. On the technical front, the Company is trading lower than the 200-day simple moving average of USD 6.46, which indicates a downside potential in the stock price. The stock made a 52-week high and low of USD 54.16 and USD 0.95, respectively.

Based on its weak technical indicators and factors discussed above, we have given an "Avoid" stance on Urban One Inc at the closing market price of USD 5.99 (as on 12 January 2021), while we would revisit our stance when upcoming catalyst becomes advantageous.

Disclaimer

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