AOL Inc. fell as much as 4.7 percent after a Goldman Sachs Group Inc. analyst lowered her recommendation on the stock to sell.
Shares of the New York-based web services company slid 75 cents, or 1.8 percent, to $40.07 and were earlier down as much as $1.92 to $38.90, the most since February. Goldman analyst Debra Schwartz lowered her rating on the stock from neutral and reduced the price forecast to $38 from $44. The stock has declined 19 percent since reaching an one-year high in January.
The downgrade reflects steepening competition in advertising technology and news content, according to the report. Competition with ad tech businesses at companies like Facebook Inc. and news and lifestyle outlets such as BuzzFeed and Vice Media could reduce AOL’s market share in each respective business, Schwartz said.
“While AOL has made progress in its ad business through acquisitions, investments, and integrations, we see an increasing competitive risk from larger platforms,” Schwartz wrote in a note Monday.
AOL will report earnings per share of 32 cents when it announces first-quarter results on May 8, according to the median estimate of analysts surveyed by Bloomberg. That would mark a 5.6 percent decline year over year. Revenue is expected to climb 1.9 percent from last year to $594 million.
Analyst expectations for 2016 and on are “overly optimistic,” according to Schwartz. AOL’s 2016 operating income before deductions and amortization will be $516 million, she wrote, 3.6 percent lower than the average estimate.