Canaccord reiterates 'hold' on Daily Mail General Trust

Canaccord said while the DMGT’s third quarter trading update last week “struck a more upbeat tone” the broker remains cautious on the outlook.

“Advertising revenues have been better since the first half warning, and showed further improvement at the start of the fourth quarter with digital growth more than offsetting print declines, but we think there is a likelihood that ad revenues will come under further pressure as the general economic environment weakens through the fourth quarter and into fiscal year 2017,” Canaccord said.

DMGT reported a 1% increase in underlying revenue for the third quarter. However, uncertainty surrounding the European Union referendum hit the advertising market.

Its DMG Media business, which includes the newspapers, saw underlying revenue fall 2% due to a weak print advertising market.

The group said third quarter performance was broadly in line with expectations and the full year outlook remains consistent with current market forecasts for adjusted pre-tax profit of £237-256m.

DMGT said Brexit has created some uncertainty, notably in respect of the UK advertising and property markets, but believes the company will continue to benefit from being a “diversified portfolio operating in multiple sectors across B2B and consumer markets, with the majority of operating profits being earned outside the UK”.

Canaccord reduced its earnings per share forecast for fiscal years 2016 and 2016 by 4.9% and 4.5% to 50.8p and 54.7p, respectively.

Shares rose 0.42% to 721p at 0930 BST.