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Lamar Wins Ad Contract

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Lamar Advertising Co’s (LAMR - Free Report) Albany based transit advertising entity, Lamar Transit Advertising recently announced that it has been awarded an advertising contract from Albany International Airport.

Within a tenure of five years the Albany International Airport is expected to earn approximately $800,000 revenue from the venture. Additionally, it will also receive 45% of Lamar Transit’s advertising revenue produced within these five years.

Under this pact, Lamar will focus more on improving Albany International Airport’s display advertising entity and raise its revenue through its inventive strategy. Consequently, this initiative will usher in enormous opportunities for the airport’s display advertising to grow in future. Lamar is estimating that the sales from advertising will reach $700,000 in the first year and a whopping $1.4 million at the end of contract period.

The company’s comprehensive range of media services helped it become a leading provider of outdoor advertising. Lamar’s pro forma net revenue jumped 4.1% annually to $266.2 million in the first quarter of fiscal 2012. Alongside, the company has a large and growing presence in the transit-related advertising market. In the first quarter of fiscal 2012, Lamar had 1,478 digital displays including 789 bulletins and 689 posters.

At the same time, it is noteworthy that Lamar operates in a highly competitive and fragmented outdoor advertising and media market, wherein lies the risk of clients shifting their accountability to other services. Their shift in loyalty may result in the loss of market share, thereby diminishing profits. The company faces intensified competition from peers like Corporation , Clear Channel Outdoor Holdings Inc. (CCO - Free Report) and Focus Media Holding Ltd. .

The current Zacks Consensus Estimates for Lamar are 15 cents and 19 cents for the second quarter of 2012 and for fiscal 2012, respectively. The company currently holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating (1-3 months). We currently maintain a long-term 'Neutral' recommendation on the stock.

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