Daily Mail General Trust PLC (LON:DMGT) left its full-year guidance unchanged after underlying revenue in the first quarter rose 2%, led by demand for online advertising.
The owner of the Daily Mail and Metro newspapers said revenue in its consumer media division increased 1% in the quarter with advertising revenue up 4% but circulation revenue from its newspaper titles down 3%.
Digital advertising growth of 10% offset a 1% decline in print advertising as more consumers opt to get their news fix online.
The group’s business-to-business (B2B) operations saw revenue gain 3%, driven by a strong performance in education technology unit Hobsons.
For the year, the company continues to expect the B2B division to deliver “low-single-digit” underlying revenue growth with an adjusted operating profit margin in the “mid-teens”.
The consumer media unit is forecast to post a “mid-single digit” underlying drop in revenue with the adjusted operating profit margin in the “high-single digits”.
LIberum upgraded its recommendation on the stock to 'hold' fom sell but lowered its target price to 625p from 685p to reflect its "double-digit" adjusted earnings per share downgrade.
The broker said while it has cut its estimates, this is "likely to understate the level of future earnings given the likelihood of acquisitions, facilitated by DMGT’s circa £200mln net cash position".
"On the Q1 trading update, we think focus will be on the surprisingly robust print advertising performance (only down 1%) in fiscal Q1 and this helped deliver a solid +2% underlying revenue growth performance for the group."
Shares rose 1.2% to 585p in morning trading.