Daily Mail and General Trust Plc (LON: DMGT) shares were down 2.2% on Tuesday as Citigroup warned investors against trying to catch a falling knife and downgraded the share.
Citi analyst Natasha Brilliant moved the bank’s rating to neutral and lowered the price target to 600p from 880p.
“It’s been a tough year for DMGT. We saw two profit warnings in H1 under the new management team,” the analyst said.
“And at the FY17 results last week, expectations for next year were rebased which, coupled with a dilutive disposal of EDR, has resulted in a more than 20 percent cut to consensus earnings.”
Brilliant added: “The company themselves believe there is more work to be done on the portfolio, and a number of DMGT’s underlying markets remain challenged with both cyclical and structural headwinds taking effect.
“At this stage, we have limited visibility on any potential improvement. On the positive, the balance sheet is in good shape suggesting a potential for increased shareholder returns, and valuation does not look stretched vs peers.”
The Citi analyst reckons the risk/reward is less compelling than it was before.