Analyst Downgrades Arbitron
November 19, 2008 at 8:39 AM (PT)
The loss of a contract with CUMULUS and CLEAR CHANNEL (NET NEWS 11/18) will likely lead ARBITRON's revenue to decline and limit the ability of its stock to climb in the near-term, a JPMORGAN analyst said WEDNESDAY.
ALEXIA QUADRANI of JPMORGAN said in a client note that ARBITRON's revenue would drop by $7 million next year and $10 million on an annualized basis due to the contract's loss. The annual impact would jump to $11.5 million if all customers in the affected markets signed with NIELSEN, she added.
"The lost revenue should have a disproportionate effect on profitability, essentially going straight to the bottom line," QUADRANI wrote.
While she still believes ARBITRON "is a strong earnings growth story for 2009," QUADRANI cautioned that "new risks will likely limit upside in the intermediate term." QUADRANI cut ARBITRON's rating to "Neutral" from "Overweight."
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