Weaker-than-normal outlook for Mediaset
EmptyROME -- The bad news continued to mount for Italian broadcaster Mediaset on Tuesday, as two investment banks lowered their outlooks for the company.
Morgan Stanley lowered its target price for Mediaset shares to €7.80 ($10.45), below the 52-week low for the shares.
The previous target price had been €9.20 ($12.33). Morgan Stanley also lowered its recommendation for the stock from "equal weight" to "underweight."
Meanwhile, Hildebrandt and Ferrar lowered its recommendation from "hold" to "reduce."
Both banks cited rising costs, a sagging advertising market and limited growth prospects tied to a pending media sector reform plan as reasons for the weaker-than-normal growth outlook.
Mediaset shares traded lower for most of the day but finished up €0.04 (5 cents) during a strong trading day on the Milan-based Italian bourse. They finished at €8.20 ($10.99), not far off their 52-week low of €7.98 ($10.69) set two weeks ago.
Mediaset shares have been the worst performing blue chips on the Italian Stock Exchange over the last year, losing 15.9% of their value in that time. But the shares rallied earlier in the year, setting a 52-week high of €9.56 ($12.81) before starting a slide in early March as the company's outlook weakened.
Last week, Goldman Sachs downgraded Mediaset earnings estimates, predicting 2007 earnings for the Silvio Berlusconi-controlled company would come in at €0.48 (64 cents), compared with €0.52 (69 cents) in previous estimates. Estimates for next year were similarly lowered, from €0.55 (73 cents) to €0.50 (67 cents). The investment bank's overall rating for Mediaset shares remained neutral.