Warner Music Group: A little out of tune

Warner Music Group reported flat results when adjusted on a normalised basis (the comparable quarter, Q1 ‘21, had an extra week in it). On a normalised basis revenues grew 2% and adjusted OIBDA increased 12.80%. Retain buy.

Warner Music Group: In-tune

Warner Music Group (WMG) reported stellar results for Q4; the stock rallied +14% post-results. The company reported revenues of $1.5B vs. estimates which sat in the low 1.4B range, whilst earnings per share sat at $0.28 vs. the street’s estimates of $0.12. We reiterate our BUY rating.

Warner Music: The Hits Keep Coming

We think private equity is correct: music catalogues are an extremely valuable asset class. However, we prefer Warner Music Group and Universal Music Group as ways to “play” this, simply because they already own a lot of catalogues and are in the business of producing more at an up-front cost with the artists they’ve signed. Private equity and Hipgnosis is in the business of paying more aftermarket, which can hike up the price significantly — we prefer to own it at the source.