TD's Updated Post Conference Call Strong Q1/22 Guidance on the Q4/21 Call
Event
Conference call just ended.
Impact: POSITIVE
Management said that getting back to Q1/20 (aka fall of 2019) levels for TV
advertising revenue is possible if a few things go right in the last 5.5 weeks of
the quarter, while total TV segment revenue (including subscriptions and content
sales) in Q1/22 should definitely exceed Q1/20. This implies TV segment revenue
growth of 10% or more in Q1/22, which we believe will be well received by
investors. The momentum and recovery continues, and as management said on
the call, "everything is working."
Dynamic ad insertion (DAI) on STACKTV just started a week ago, and this new
way of sending ads to streaming viewers is one small part of the company's
optimism on revenue growth (revenue in the mid-single digits millions is expected
in fiscal 2022).
Some observers might argue that commentary on the call regarding programming
expense growth (up low double digits for FY22, with a skew towards Q1/22 owing
to increased U.S. shows being delivered to Global plus catch up spending on
Canadian content that got delayed last year by the pandemic), but we do not
believe this is new information directionally, because management has been
talking about a return to more normal programming costs for a few months. Note
that our model (pre-Q4 results) had Amortization of Program Rights Expense
at $132.2mm in Q1/22, versus $109.7mm in Q1/21 (up 20% Y/Y), and versus
$132.6mm in Q1/20 (so basically flat over two years).
We were also please with management commentary regarding new two-way
content partnerships being formed with U.S. broadcasters, including the recent
Discovery+ deal where Corus was able to extend the duration of its content supply
deal in return for helping Discovery with the launch and promotion of its streaming
service in Canada.
Recommendation: ACTION LIST BUY
Risk: HIGH
12-Month Target Price: C$9.50
12-Month Dividend (Est.): C$0.24
12-Month Total Return: 69.4%