May 21 (Bloomberg) -- Yell Group Plc, the publisher of the U.K.'s Yellow Pages phone directory, fell for a second day in London trading after it cut the dividend and some analysts lowered their price targets for the company.

Yell slid 23.25 pence, or 15 percent, to 130.75 pence. Yesterday, Yell retreated 26 percent, the biggest drop since it first sold shares to the public in 2003.

Chief Financial Officer John Davis said in an interview yesterday the company was experiencing ``a tough'' economic environment, reiterating comments from February when Yell slashed its 2008 sales growth forecast for the U.K. unit. The Reading, England-based company cut its final dividend in half to 5.7 pence a share, saying it needs greater ``financial flexibility.''

``The cut to the dividend is hard to stomach,'' Citigroup analyst Thomas Singlehurst, who reduced his Yell price target to 333 pence from 360 pence, wrote in a note to clients today. ``We hadn't expected it and it removes a key valuation support.''

Credit Suisse analyst Nick Bertolotti yesterday lowered his price target for Yell to 140 pence a share from 275 pence.

Full-year net income sank 2.8 percent to 206.7 million pounds ($404 million), or 26.3 pence a share, from 212.7 million pounds, or 27.3 pence, a year earlier, Yell said yesterday.

Some customers were delaying and reducing ad spending, CFO Davis said yesterday.

``There's a lot of caution out there amongst all of our advertisers,'' Davis said. ``The general sentiment in all three of our economies has changed quite markedly and that has continued through the financial year that we're currently in.''

To contact the reporters on this story: Alex Armitage in London at aarmitage@bloomberg.net

Last Updated: May 21, 2008 11:45 EDT