Shares of USA Today publisher Gannet Co., Inc. fell 7% on Friday morning to mark its biggest one-day decline since February, after J.P. Morgan downgraded the stock to underweight from neutral.
“Shares have been relatively stable recently despite ongoing concerns regarding print circulation and advertising trends,” wrote analyst Alexia Quadrani in a note. “Furthermore, our last several earnings revisions have been negative and we remain concerned about the outlook for both print circulation and advertising in an environment with rising newsprint costs,” she added.
Gannett GCI, -6.78% is well-positioned among local print media groups; it has a strong national brand in the USA Today Network and increasing scale from recent acquisitions such as ReachLocal, which Gannett purchased in 2016. But “we remain concerned by the ongoing weakness in print advertising, which appear to be only partially offset by operating efficiencies,” wrote Quadrani.
While analysts at J.P. Morgan “remain hopeful” for ongoing healthy growth at ReachLocal, an online marketing firm that Gannett acquired in 2016, they think Gannett’s print business will be a drag on growth, leading to projected declines in revenue in 2018.
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The firm is maintaining its December 2018 price target of $10.
Gannett shares have tumbled 10.7% so far this year, while the S&P 500 SPX, +0.89% has risen 2.4%.
See: USA Today publisher Gannett tops revenue estimates
Shares of USA Today publisher Gannet Co., Inc. fell 7% on Friday morning to mark its biggest one-day decline since February, after J.P. Morgan downgraded the stock to underweight from neutral.
“Shares have been relatively stable recently despite ongoing concerns regarding print circulation and advertising trends,” wrote analyst Alexia Quadrani in a note. “Furthermore, our last several earnings revisions have been negative and we remain concerned about the outlook for both print circulation and advertising in an environment with rising newsprint costs,” she added.
Gannett GCI, -6.78% is well-positioned among local print media groups; it has a strong national brand in the USA Today Network and increasing scale from recent acquisitions such as ReachLocal, which Gannett purchased in 2016. But “we remain concerned by the ongoing weakness in print advertising, which appear to be only partially offset by operating efficiencies,” wrote Quadrani.
While analysts at J.P. Morgan “remain hopeful” for ongoing healthy growth at ReachLocal, an online marketing firm that Gannett acquired in 2016, they think Gannett’s print business will be a drag on growth, leading to projected declines in revenue in 2018.
Read also: World Wrestling Entertainment is ‘among the safest plays in media now,’ says analyst
Related: Lee Enterprises rockets 56% premarket on news it will manage Berkshire’s newspapers
The firm is maintaining its December 2018 price target of $10.
Gannett shares have tumbled 10.7% so far this year, while the S&P 500 SPX, +0.89% has risen 2.4%.
See: USA Today publisher Gannett tops revenue estimates
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