swm target $6.11 a share (if so beers on me)

Lew Fellowes - WA State Manager (Private Clients), Patersons


Seven West Media (SWM)
Current share price weakness presents a strong opportunity to buy Seven West Media offering fundamental value and high fully franked yield.
We view the stock as heavily oversold. The negative sentiment towards the media sector is justified, but the sell-down looks excessive.
SWM is trading on a PER of 8.8x and 7.8x for FY11 and FY12 respectively. We also forecast a fully franked yield of 11.4 per cent for this year and next.
We expect the group to announce a final dividend of 26cps at the release of the FY11 result this month - that one dividend (paid in September) represents a yield of 6.5 per cent (fully franked) on its own. We retain a Buy recommendation and price target of $6.11.