Yesterday’s interim results from Pearson caused the share price to fall heavily during the day, but after the company made some reassuring noises, stock picked up again to close up 49p at 1,087p. During this morning’s trading, however, demand has weakened and the shares were down by 24p at 1,063p by 11:00am.
The results showed that whilst Pearson is performing solidly it has nevertheless been hit by the advertising slowdown, particularly at the group’s
Financial Times newspaper (see
Pearson Results Show FT Profits Hit By Ad Downturn). Shares were probably made more volatile following a lot of negative talk leading up to the release of the results.
The Times notes that Pearson four years ago set itself a target of annual double-digit earnings growth and for its market value to be doubled in five years. So far, it has failed on neither of these objectives. However, ongoing internet costs and the problems of the advertising decline in its newspaper and television interests could make these targets increasingly hard to achieve, warns the paper.
Merrill Lynch raised its rating on Pearson from Buy to Accumulate following the results. Goldman Sachs, meanwhile, dropped its earnings per share target by 11% for 2001 and 7% for 2002.
Goldman Sachs: Recommended Merrill Lynch: Accumulate ABN Amro: Hold JP Morgan: Market Perform, target reduced from 1,350p to 1,150p UBS Warburg: Hold Credit Lyonnais: Add
