If you guessed oOh!media Ltd (ASX: OML), you're spot on!
Macquarie just reiterated its Outperform rating on the out-of-home advertising company, with a 12-month price target of $2.00, implying an 17% total shareholder return from the current share price of $1.71.
Let's dig into why oOh!media is back in the spotlight.
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A rare bright spot in traditional media
While free-to-air TV and newspapers are fighting for relevance, out-of-home (OOH) advertising is quietly staging a comeback. According to Macquarie, the OOH sector grew 18% year-on-year in 1H25, outperforming most other ad formats. For oOh!media specifically, revenue for the first half of 2025 is expected to be up 13%.
Macquarie believes that growth in this sector has been stimulated by lower interest rates which are having a flow on effect on greater ad spend. The broker is forecasting 10% revenue growth for FY25, with a solid 3-year EPS compound annual growth rate (CAGR) of 12% to follow.
The benefit of operating leverage
What makes this story even more compelling is oOh!media's cost discipline.
While top-line growth is healthy, operating costs are expected to remain flat, unlocking operating leverage. That means more of every new dollar of revenue earned should flow through to profits.
Even after losing a major contract with Auckland Transport contract (which Macquarie believes was contributing $25 million in revenue and $8million in EBITDA) the outlook remains strong.
Macquarie are forecasting a phenomenal 52% year-on-year growth for OohMedia! when it reports 1H25 results in August.
Valuation
Macquarie sees value in oOh!media's current multiple of 12.6x forward earnings, below its long-run average of 14x and also below the average for the ASX300 Industrial index. With margins expanding and free cash flow improving, there's a plausible case for a valuation re-rating.
The broker's quant model also ranks oOh!media favourably on valuation, momentum, and analyst revisions, even if quality metrics are somewhat weaker due to earnings volatility.
The Foolish bottom line
oOh!media isn't a flashy tech play or an AI darling but it's executing well in a forgotten corner of the media landscape. There is a lesson in there about being open to finding where opportunity hides across different sectors.
With strong earnings momentum, cost control, a supportive macro tailwind and a below average valuation, oOh!media could surprise to the upside.
Macquarie certainly thinks so.
