J.P Morgan Upgrades Sinclair Broadcast Group To Overweight

J.P Morgan is upgrading Sinclair Broadcast Group SBGI shares to Overweight. Over the past year, its longer-term structural concern on local TV broadcasters' business models has generally kept it on the sidelines despite obvious improvement in fundamentals. But it's hard for JPM to keep ignoring the persistent ad recovery, ramping FCF generation, and signs of life in the M&A market. J.P Morgan is lifting its 2011-12 estimates. In Q1,11, Broadcasting revs. are expected to lift 5-6% with EBITDA up ~15%. Auto could rise 18%, while Telco and Pharma remain solid. Results will get a boost from ~$6MM of Super Bowl revs. In 2011, TV operating costs could lift just 6%. Sinclair is essentially “done” with reverse comp. deals. JPM expects EBITDA of $269MM in 2011 and $292MM in 2012. J.P Morgan has a PT of $14 on SBGI SBGI closed Wednesday at $10.99