First Albany downgraded Playboy Enterprises (PLA ) to neutral from buy.
Analyst Randall Scherago says second-quarter results for the publishing giant were weaker than expected and key metrics were missed. He notes online revenue growth slowed, coupled with high churn. Also, international revenues were flat, and the number of domestic-TV digital subscribers dropped.
Scherago cut the 20 cents 2004 EPS estimate to 1 cent, and trimmed the 50 cents 2005 estimate to 40 cents. He thinks Playboy could stay at $8 to $12 per share over the next six-to-12 months until online, international, and domestic TV metrics start improving. Also, Scherago says growth drivers are needed in 2004 and 2005, including positive operating leverage from broadcasting, the profitability of the online division, and growth of licensing revenue.