Carlton Stock Free-Falls Following Trio Of Downgrades
Stock in Carlton Communications tumbled this morning after three brokers downgraded their earnings forecasts for the group. By late morning Carlton shares were down 27½p (6.6%) at 387½p.
ABN Amro has reduced its full year profit before tax forecasts by 5.5% to £246 million. The downgrade is partly due to the timing of the sale of the Technicolor production business: ABN had reckoned on Technicolor contributing six months to Carlton’s figures, rather than the five and a half that is now the case. This is amplified by the fact that March is one of the most profitable months and the estimate of Technicolor’s contribution falls from £77 million to £69 million, says ABN.
The broker’s advertising forecasts remain the same at a predicted 4.4% decline. However, it warns that the risk of further advertising-related downgrades remains. Revenues will be down by 6-7% in the first half and 10-15% in the third financial quarter.
Carlton stock was battered further this morning by similar downgrades from Merrill Lynch and UBS Warburg. Merrill Lynch knocked pre-tax profit expectations down following the fall in ITV advertising revenue and also adjusted for the quicker than expected sale of Technicolor, as did UBS Warburg.
