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Investment banker Berenberg has cut back on its expectations for German broadcasting giant Pro7Sat.1. In terms of the broadcaster’s share price the bank says its 12-month target is cut by €2 from €29.60 to €27.60.
The reasons are the broadcaster’s “material underperformance” over the past year, although stressing that the bank’s view is some 5 percent below that of analysts’ consensus. For Q2 the bank expects group revenues of €689 million, up 10.2 per cent and driven by consolidation benefits in both Content and Digital & Adjacent, as well as 5 per cent growth in German Broadcasting.
At the revenue level, the bank is trimming its estimates for the broadcaster’s Digital & Adjacent business to reflect a slower rate of growth in 2014 than it had previously assumed. “This reflects issues within the Games division, which has been restructured this year, as well as increasing competition for Maxdome, which is likely to face ongoing pressure with the entry into the German market of Netflix later this year. Our Digital & Adjacent growth rate (organic and acquired) falls from 30.5 per cent to 26.6 per cent this year as a result.”
The bank adds: “Conversely, we have increased our forecast for distribution revenues, following the addition of ProSieben Maxx HD to the HD+ platform. We now forecast 25 per cent growth in distribution revenues versus 21 per cent previously. This combines both encrypted free-to-air and pay channel revenues generated via satellite, cable and IPTV. Overall, our group top line is virtually unchanged.”