Independent News and Media share price target reduced sharply by Davy
The price dropped from from €3.85 to €1.95 in order to reflect falling company valuations in the media marketplace.
However, rather than referring to it as a marked reduction, Davy media analyst Stephen Furlong said the new price reflected current market conditions rather than anything else.
“We’ve reduced our price target to reflect the current valuation realities and the cyclical downturn in media plays. This is a combination of a sum-of-the-parts, asset valuation including mastheads and the earnings multiples of peers,” he said.
The new price is still a maintainable price, ahead of INM’s current share price. The world has changed for all companies in the last year, media businesses included. In the short-term, the market is likely to focus on the effect that the global slowdown has had on advertising markets and resulting revenues, Mr Furlong added.
According to Mr Furlong, despite market conditions and falling valuations, INM still has plenty of strength due to its diverse business make-up — which spans newspaper publishing, radio ownership, outdoor advertising and online recruitment on four continents.
“We believe INM’s businesses in South Africa and India continue to perform well, illustrating the group’s strength in diversity,” said Mr Furlong.
“The investment in Indonesia highlights its exposure to dynamic markets which offer superior long-term growth prospects. As a result of this diversity, INM’s earnings are more stable than those of most of its peers.
“For this reason, we believe it should trade at a valuation premium, while it currently trades at broadly in line with the international sector,” he added.
INMs share price closed at €1.47 yesterday.
