CJ ENM price target, recommendation lowered on weak earnings

[Photo by Yonhap]

A slew of South Korean brokerage houses on Monday lowered their price target and recommendations on CJ ENM Co. shares after the company posted a loss in the first quarter.

In a report on CJ ENM issued on Monday, DB Financial Investment analyst Shin Eun-jung said she downgraded her full-year operating profit forecast on CJ ENM by 61 percent. While company’s operating loss is expected to narrow in the second quarter, losses from its content business will continue through the first half of this year. The price target for the stock was also lowered to 86,000 won ($65.2) from 130,000 with the recommendation was revised to neutral from buy.

The analyst estimates that the company’s full-year operating profit for this year will come to 106 billion won, down 23 percent from a year ago.

The stock fell 33 percent in the last three months due to concerns over poor performance, getting closer to its lows. Outlook for future TV advertising market, expansion in paid subscribers for Tving and earnings improvement of FIFTH SEASON, or CJ ENM’s U.S. studio, remains highly uncertain, Shin said.

Samsung Securities analyst Choi Min-ha also lowered the price target to 99,000 won from 105,000 won. However, she maintained her buy recommendation.

Commenting on CJ ENM’s performance, which turned into an operating loss of 50.3 billion won in the first quarter, the analyst said that advertising sales were sluggish due to the economy and operating loss widened due to the absence of new hits from FIFTH SEASON and the burden of production costs for Tving shows.

In addition to DB Financial Investment and Samsung Securities, multiple brokerages lowered their price targets for CJ ENM.