JP Morgan downgraded Knight Ridder (KRI) to neutral from overweight.
Analyst Frederick Searby says the company is cutting a 4.7% industry advertising revenue estimate to 3.7%. He says the positive stance had been based on recovery in help wanted, relatively superior cost control efforts, and a rebound in the underperforming Philly market.
While the predictions came true, the magnitude of the recovery has been somewhat less than expected. Searby says Knight Rider struggles largely due to its overexposure to underperforming metro markets and competing advertising medium.
He cuts his $4.20 2005 earnings per share estimate to $4.10. He says while the company showed some recent advertising outperformance, he doesn't think growth is sustainable beyond the near-term.