J.P Morgan Maintains Neutral On Martha Stewart Living Omnimedia Following Earnings

J.P Morgan is maintaining its Neutral rating on Martha Stewart Living Omnimedia MSO shares. In Q4,10, revenues fell 17% with EBITDA of $4.4MM. EPS of $0.07 compared with JPM's $0.09. Results were skewed by the wind-down of the Kmart contract and other 1-timers. But MSO exhibited modest improvement v. recent quarters. Magazine ad trends remain uneven, but MSO expects modest growth in Q1,11. In Merchandising, strong gains are expected in 2011 as Home Depot, Macy's, and other partnerships ramp. Segment EBITDA could run at least $30MM in 2011. The company's new programming block on Hallmark remains a work-in-progress, but ratings improved throughout Q4 and management is pleased with the trajectory. Merchandising revenues dropped 55%. Revenues were +31% excluding $16.8MM of Kmart revs. in Q4,09. Costs more than doubled, while margin was 60.5%. MSO's 5 major partnerships had aggregate retail sales of $715MM in 2010—and management thinks $1 billion-plus is likely in 2011. MSO is trading lower at $4.13