Shares in TalkTalk Goup plc (LON:TALK) fell 8% on Tuesday after a leading American research house became even more bearish on the stock.
Previewing the first-quarter figures next week, the telecoms team at Jefferies painted a bleak picture.
It expects average revenue per user (ARPU) to decline at a faster pace than the market is currently predicting and warns investors the churn rate (level of cancellations) will increase.
“New plans do not effectively re-establish TalkTalk’s value credentials in our view, whilst fibre, mobile and content impair prospects for future margin expansion,” said Jefferies in a note to clients.
It has dropped its price target to 125p a share (from 140p) and cut back its dividend forecast by 24% to 12p a share. It expects the stock to 'underperform'.
At 10am, TalkTalk was down 12.7p at 150.7p.
Of the nine analysts logged as following TalkTalk on the Broker Forecasts site, five are in the ‘sell’ camp; the remainder have ‘buy’ recommendations.
The consensus price target, which was 243p six months ago, is currently 196p.