BATON ROUGE, LA – Lamar Advertising Co (NASDAQ:LAMR) has entered into a significant equity distribution agreement, potentially reaching $400 million in sales of its Class A common stock. The deal, formalized on Wednesday, involves major financial institutions, including J.P. Morgan Securities LLC and Wells Fargo (NYSE:WFC) Securities LLC, among others, as sales agents.
The agreement allows Lamar, a real estate investment trust specializing in outdoor advertising, to issue and sell shares at market prices through these agents. This arrangement replaces a similar, now-expired agreement and provides the company with flexibility in financing its operations and growth.
Shares may be sold in various transactions, including on the Nasdaq Global Select Market where the company's stock is listed. The sales agents are entitled to a commission of up to 2% of the gross sales price per share sold.
Lamar has stated that the proceeds from the stock sales will be used for general corporate purposes. These could include repaying or refinancing debt, funding working capital or capital expenditures, and investing in acquisitions within the outdoor advertising sector.
The offering of shares will be made under a shelf registration statement filed with the SEC, and the company has also filed a prospectus supplement detailing the terms of the stock sales.
In other recent news, Lamar Advertising Company reported a significant revenue increase of 5.3% in its first-quarter 2024 results, marking the largest growth in 12 consecutive quarters. The company's Adjusted EBITDA also saw a 6.5% rise, bolstered by robust local sales and the company's digital platform. Despite a dip in national advertising spending, Lamar raised its full-year Adjusted Funds From Operations (AFFO) per share guidance to between $7.75 and $7.90.
TD (TSX:TD) Cowen recently initiated coverage on Lamar Advertising with a Buy rating, citing the company's market leadership and potential for continued growth. Conversely, Citi downgraded Lamar Advertising stock from Buy to Neutral, based on an analysis indicating limited potential for near-term AFFO multiple expansion.
In addition, Lamar Advertising completed four acquisitions totaling $18 million in Q1, further solidifying its market position. The company anticipates steady organic growth throughout 2024, with support from political advertising in the latter half of the year. These are among the recent developments for Lamar Advertising Company.
InvestingPro Insights
As Lamar Advertising Co (NASDAQ:LAMR) positions itself for growth through its new equity distribution agreement, investors may benefit from understanding the company's financial health and market performance. With a market capitalization of $12.3 billion, Lamar exhibits stability in the outdoor advertising industry. According to real-time data, the company has a Price/Earnings (P/E) ratio of 24.7, which is slightly higher at 24.98 when adjusted for the last twelve months as of Q1 2024. This indicates that the stock is trading at a premium relative to near-term earnings growth, a point of interest for value-focused investors.
InvestingPro Tips reveal that Lamar's stock price movements are notably volatile, which could present opportunities for traders looking for short-term gains, but may also suggest caution for those seeking more stable investments. The company's short-term obligations exceeding its liquid assets could warrant a closer look into its financial agility. Despite these considerations, Lamar has been profitable over the last twelve months and analysts predict profitability for the year ahead. Moreover, the company has provided a high return over the last decade, reinforcing its long-term appeal.
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