Davy reaffirms 'outperform' rating for INM shares
Published 11/08/2011 | 05:00
DAVY Stockbrokers has reiterated its "outperform" rating for shares in Independent News & Media (INM).
"While financial markets are tough, we believe that INM's valuation fails to take account of its leading positions in both the Irish and South African newspaper markets," Davy Stockbrokers analyst Simon McGrotty wrote in a note to clients.
The shares rose 9.6pc on Tuesday before being caught up in yesterday's worldwide sell-off, closing at 27c.
Shares in media companies have taken a hammering lately on concern that the slowing economy, combined with the internet, will curb profit in the months ahead.
"Global media stocks have suffered and Independent News & Media has been no exception," Mr McGrotty wrote.
INM's decline is "broadly in line with peers" such as Trinity Mirror and Johnston Press, the analyst noted.
Investors don't appear to be valuing the company's South African operations, which the analyst believes will account for half of INM's earnings before interest and taxes.
INM, which publishes this newspaper, will post first-half results later this month.
INM was likely to announce progress toward debt reduction, the analyst added.
He forecast first-half group sales of €285m and earnings before interest, taxes, depreciation and amortisation of €39.8m.
"INM's valuation remains compelling and we reiterate our 'outperform' rating," Mr McGrotty said.