Zacks Investment Research downgraded shares of Shaw Communications Inc. (SJR) from NEUTRAL to UNDERPERFORM on June 18, 2012, with a target price of $17.00.
We are downgrading our recommendation on Shaw Communications to Underperform ahead of the release of its third quarter-fiscal 2012 financial results. The company continues to lose basic cable TV customers, reflecting that management is yet to make a turnaround. Since the company already abandoned its wireless venture, it is very crucial for Shaw Communications to execute video offerings properly in order to sustain its future growth. Furthermore, the Media segment is facing continued softness of the Canadian advertisement market. Apart from video segment, the company markedly improved its customer base for other offerings in the previous quarter. However, this impressive performance is related to massive spending for aggressive promotional activities, resulting in sheer fall of EBITDA margin and free cash flow. Consequently, the company reduced its previous outlook for fiscal 2012.
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