Zacks Investment Research downgraded shares of Meredith Corporation (MDP) from NEUTRAL to UNDERPERFORM on September 26, 2014, with a target price of $40.00.
Declining print media trends have cast a pall of gloom over traditional publishing businesses and Meredith Corp. is no exception. Shift to digital has been pressuring magazine subscription and circulation revenues as evident from the fourth quarter fiscal 2014 top line results that fell 1% y/y and also missed the Zacks Consensus Estimate. This compelled us to downgrade the recommendation on the stock to Underperform. In addition, volatility in prices of raw materials and advertising revenues add to the woes. Any fluctuation in the advertising revenues which accounts for 53% of total revenues and prices of paper and postage which accounts for 22% of National Media's operating costs in fiscal 2014 may upset the bottom line significantly.
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