Pali Research’s Rich Greenfield, Warner Music Group’s (WMG) loudest and most bearish antagonist, has upgraded the company.
Are pigs flying? Are there snowball fights in hell? Nope. Rich is still Rich, and WMG is still WMG. Rich just figures that now that the company is back at the $5 floor he predicted last fall, it won’t go any lower for a while. So he’s bumping up his call from “Sell” to “Neutral”*. And in a two-paragraph research note, he still finds time to pee on the company:
The key problem facing WMG longer-term is their ability to prevent covenant violations as their EBITDA is declining (with debt growing as they continue to buy assets to “prop up” revenues and EBITDA). The board needs to cut the dividend immediately, dramatically reduce headcount, and radically reduce employee compensation across the board.
* A previous version of this post misstated Rich’s new position as a “Buy.” We were obviously groggy this am.
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