Shares digital

by Susanna Twidale

Times are set to get even tougher for the UK newspaper groups, according to the latest swathe of target price reductions stamped across the sector by Goldman Sachs’ media analyst Mike Cunningham.

While he believes first quarter results should show some resilience in the advertising markets pressures are likely to emerge in the second quarter leading to cuts in spending which will have an impact on Johnston Press, Trinity Mirror and Daily Mail & General Trust. ‘We expect a marked slowdown in 2H as key macro forces impact the advertising sector, with commodity price inflation squeezing advertiser margins and consumer demand,’ he says.

Buy ratings on Johnston Press and Daily Mail have been retained, however, a reflection of the decline in their share prices, falling 74% to 125p and 51% to 423.75p respectively over the last year, and are still well below their new target prices of 292p and 608p.

The worst looking of the three is Trinity Mirror according to Cunningham, where he cut his target price by 18.3% to 273p and maintained a sell rating. ‘We believe Trinity’s struggling national and regional franchises are likely to face further cyclical pressure than consensus suggests,’ he says.

Independent News and Media which, as well as owning The Independent in the UK has operations in a further 21 countries, also had its target price trimmed by 8.1% to ?1.93 as Cunningham believes advertising markets across the globe will face similar problems, but its neutral rating was maintained.