A recent drop in the share price of Scotsman publishers, Johnston Press, had The Herald yesterday reporting a 'leading stockbroker' warning the paying out of dividends might not resume for two years.
Wrote The Herald's Simon Bain, a drop in share price to 15p has prompted Singer Capital Markets “slashing its price target from 43p to 16p”. At the end of last month, it was 20p.
Next week, the publisher of The Scotsman plus sister titles Scotland on Sunday and the Edinburgh Evening News is reporting its interim financial results.
Adds Bain: “The broker has cuts its earnings estimates for Johnston in 2010 and 2011 by 26 per cent and 38 per cent respectively, on the basis that borrowings will have to rise rather than stay flat this year, risking the postponing of a dividend resumption until 2012.”
But he goes on to quote Singer Capital Markets being more upbeat in its assessment of Daily Record and Sunday Mail publisher, Trinity Mirror – which also owns the Scottish and Universal portfolio of Scottish local weekly newspapers.
The stockbroker is understood to be reporting: “Trinity Mirror looks the more attractive of the pure press plays at this stage with forecast upgrade momentum and a path to a dividend emerging.”
Continues Bain: “Singer repeated its ‘buy’ rating on Trinity, whilst downgrading Johnston to ‘fair value’
“Shares in Johnston have swung wildly, dropping from 50p to 5p in the six months to March 2009, rallying to 44p last September, and sitting comfortably above 30p through April and May, before halving since then.”
By close of play yesterday, Johnston Press shares ended 15p.