Saturday, October 08, 2016

Top-Performing Finnish Media Stock Rose 152% The Past Year - But Analysts Aren't Buying It

Via Business Insider:

Sanoma Oyj's performance over the last twelve months goes to show that traditional media still has some vitality. The stock price has increased by 152%, making it the top-performing media stock in Europe, but analysts remain unswayed, according to Bloomberg.

The increase in value, reflecting successful efforts to return Sanoma to profitablilty is met with skepticism from analysts. As of September 30, four out of eight analysts covering Sanoma rate it 'underperform' or 'sell', according to the Financial Times. Only one in eight thinks it will outperform the market. Taken together that means analyst sentiment towards the stock has deteriorated over the past year.

The question is, even if Sanoma Oyj has reversed the negative trend by cutting costs and increasing advertising revenue, how long can it last? Will it be long enough to motivate the share price trading of EUR 8.65 - 17.3 times the year's estimated earnings?

Sanoma Oyj's CEO, Susan Duinhoven, thinks the company has a few advantages over the online competition. For one, content in Finnish is still very unaccessible to international competitors. Another advantage is that Sanoma has a presence in many different kinds of media. That has turned out to be an attractive selling point for advertisers, and is something that is difficult to replicate for competitors that are only digital.

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