Sanoma Slumps on Analysts’ Post-Warning Cuts: Helsinki Mover

Sanoma Oyj fell for a second day in Helsinki trading as analysts took a bleaker view on the stock after the media company said sales would fall more than previously forecast amid weaker advertising markets.

Sanoma shares slid as much as 2.2 percent to 5.9 euros, and traded at that price at 1:39 p.m. in the Finnish capital. Volume on the stock was 78 percent of the three-month daily average.

Sanoma sales will fall more than 4 percent this year and operating profit excluding one-time items will be less than 180 million euros ($238 million), it said yesterday. The chance of a clear improvement in Sanoma’s markets this year is low, it said. The company had previously forecast a sales drop of 2 percent to 4 percent and profit in the range of 180 million euros to 205 million euros.

“Even though the weak advertising market trend was again blamed for the profit warning, it would be naive not to mention the structural challenges facing the entire printed offering, with magazines as the biggest question mark,” Sami Sarkamies at Nordea Bank AB wrote in a note to clients. “Recent management changes and cost overruns indicate wider internal challenges.”

Nordea downgraded its recommendation on Sanoma shares to hold from buy and reduced its 12-month price estimate 13 percent to 6.50 euros. FIM Bank Oyj, which said clients should continue to hold the shares, cut its price estimate to 6 euros from 6.50 euros. That pushed the average of analyst estimates to a record-low 5.90 euros, according to data compiled by Bloomberg.

Not Winner

“Sanoma will be going through major changes in upcoming months,” said analyst Sauli Vilen at equity-research company Inderes Oy. He has had a reduce rating on the stock since March 22. “We advise investors to avoid the stock as there is a high chance that Sanoma won’t come out as a winner.”

Sanoma’s advertising income is suffering from the euro area’s recession as well as a structural shift by consumers to online content from print. The company plans to continue investments in transforming its core operations, Chief Executive Officer Harri-Pekka Kaukonen said in a statement yesterday. It targets cost cuts of 60 million euros by the end of 2015.

“Future strategic actions and plans for concrete measures are at the moment more important than earnings for this year,” Mona Grannenfelt, Helsinki-based analyst at FIM, wrote to clients. Sanoma reports second-quarter earnings on Aug. 1.

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