Nielsen's Digital Opportunity Is Already Priced In, Morgan Stanley Downgrades

Morgan Stanley’s Toni Kaplan downgraded the rating for Nielsen N.V. Ordinary Shares NLSN from Overweight to Equal-weight, while maintaining the price target at $52. Following strong gains in Nielsen’s shares over the past six weeks, the company’s digital opportunity appears already priced in, the analyst said.

Over the last six weeks, Nielsen’s shares have appreciated around 18 percent, versus 8 percent gains for Analytics peers and a 2 percent decline in the S&P 500. The company’s shares are now trading close to the price target, justifying the downgrade.

Nielsen’s business model is resilient business model, with more than 70 percent of recurring revenues. Such a business model may be view as “highly desirable,” given the choppy market conditions, analyst Toni Kaplan commented, while adding that there were positive catalysts in the form of “the stronger TV advertising and excitement over the syndication of NLSN's Digital Content Ratings product (anticipated in 2Q16).”

“Our proprietary survey work and commentary from the company lead us to continue to expect that NLSN will succeed in becoming the currency for digital media measurement. Nonetheless, we believe that achieving success in digital is currently reflected in current share prices,” the analyst wrote.