Mediaset shares fall after downgrade

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ROME -- Mediaset shares closed below the 6 euro level for the first time in four sessions Monday as two investment banks downgraded the company's shares, which surged Friday on speculation that controlling shareholder Silvio Berlusconi could be on track to be Italy's prime minister.

Investment bank Landsbanki Kepler on Monday lowered its target price for Mediaset to 5.70 euros ($8.38) from its previous target price of 8.70 euros ($12.79), citing "uncertain returns on the group's strategy combined to more conservative long-term assumptions" for advertising growth.

Similarly, ABS Securities lowered its rating on Mediaset shares to "hold" from "accumulate," the previous rating. ABS kept its Mediaset price target at 6.30 euros ($9.26).

"There are some fundamental uncertainties for the shares that become a concern at these price levels," ABS analyst Pietro Arno said in a telephone interview, adding that investors who bought Mediaset shares on speculation that Berlusconi could return to the prime minister's office may have overestimated the value that could represent for the company.

The shares rallied slightly at the close, but still finished at 5.96 euros ($8.76), down a little more than 3% on the day in heavy trading on a day when the overall market was flat and the Italian Stock Exchange's Media Index gained 3.2% despite Mediaset's losses. The shares were down as much as 4.4% at midday.
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