JPMorgan Is 'Hopeful' For Gannett, But Concerns Remain

JPMorgan analyst Alexia Quadrani downgraded Gannett Co Inc GCI — the media holding company that operates USA Today and its network of affiliates — from Neutral to Underweight, maintaining a $10 price target.

The Thesis

Gannett is considered well-positioned among local print media groups thanks its strong brand, and recent acquisition of ReachLocal, and shares have been stable despite long-time concerns regarding print circulation and advertising trends.

However, JPMorgan has repeatedly found cause to cut its earnings projections. The company’s print business has weighed down growth from ReachLocal — an online marketing solutions provider — and other online initiatives.

“Therefore relative to our broader media universe, we believe GCI shares will remain an underperformer,” Quadrani said in a note.

Upside risks for the company include further publication acquisitions, outperformance from ReachLocal and positive volatility in the advertising market.

Price Action

Gannett shares were trading down about 7.7 percent to $10 at time of publication.

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