By: Jennifer Saba Deutsche Bank Securities downgraded Gannett to a "hold" from a "buy" Wednesday morning. While the research firm said the company's Q3 performance was "okay," it was worried that "the chance of further disappointment to growth is much more likely than an upside surprise."
Deutsche Bank raised Gannett's Q4 earnings per share estimate -- due wholly to recent transactions -- to $1.46 from $1.41. Its 2006 EPS estimate remains the same at $5.33, 3% below consensus. "Even that could be at risk due to retail consolidation, compounding weakness in NBC ratings, and soft UK trends," the research firm concluded.
Analysts are also concerned that Gannett is more interested in buybacks than dividends. "We do not think the market is currently 'paying' for share buybacks so we don't think this will provide investors with downside protection," Deutsche Bank said.
Last November, the firm raised Gannett's rating to "buy" due to the company's cheap stock valuation relative to the industry and its small market focus. "Unfortunately," said the note, "we see the group's valuation coming down to [Gannett], not the other way around."
As of this afternoon, Gannett's stock was trading down $.90 to $65.32.
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