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NEW YORK — Shares of Lamar Advertising Co. edged only slightly lower Tuesday after a Goldman Sachs analyst downgraded the billboard operator, saying the company's shares are trading at a higher value than what they are worth.
Analyst Mark Wienkes lowered his rating to "Sell" from "Neutral," with a target price of $15. He said short-term estimates and the stock's valuation "factor in a sharper recovery than what is likely" for the company. He called the stock's short-term risk-reward profile "unfavorable" when compared with similar companies he covers.
The stock's current price, the analyst said, implies an "overly optimistic" 2010 advertising growth rate of 10 percent year-over-year, compared with his estimate of a 4 percent growth.
"Owing to the longer average duration of business contracts, outdoor advertising has a much longer cycle time than other media," Wienkes said in a note to investors. "As a result, the industry is typically late in entering and exiting cycles, both on the upside and the downside."
Shares fell 17 cents to $21.63 in afternoon trading. Earlier in the day, the stock was trading as low as $19.73.
