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Publisher suffers share slump after disappointing quarter

Daily Mail & General Trust (DMGT) 697p

Loss to date: 7.1%

Original entry point: 750p, 6 Oct 2016

A disappointing update (26 Jan) from newspaper publisher and business-to-business (B2B) information group Daily Mail & General Trust (DMGT) has wiped out earlier gains from our trade on the stock. However, it doesn’t change our positive view of the investment case.

Growth at the company ground to a halt in the last three months of 2016. Revenue was flat at £520m year-on-year but the company says it is still on track to hit expectations for the full year to 30 September 2017.

GI update DAILY MAIL 020217

Guidance for underlying revenue growth in the DMG information business was reduced from high-single digit to mid-single digit.

Chief executive Paul Zwillenberg, who was appointed in May 2016, took advantage of the share price slump to buy nearly £35,000 worth of stock at 693.76p.

Liberum analyst Ian Whittaker said DMGT benefits from having a portfolio of businesses where some parts can offset weakness elsewhere in the business.

Whittaker who has a ‘buy’ recommendation and 900p price target says a reorganisation of this portfolio can unlock value not currently recognised by the market.

We still think Zwillenberg can create value for shareholders despite a somewhat disappointing start to the financial year. (TS)

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