Vivendi SA (VIV.FR) shares fell Friday after it lowered its outlook for 2017 late Thursday, in part due to charges at pay-TV unit Canal+.
The French media company said its 2017 revenues should increase by close to 5% at constant currency, below a previous forecast. Earnings before interest, taxes and amortization are expected to grow organically by 20% to 25%, after exceptional costs at Canal+.
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That is a change from November, when Vivendi said revenues would rise by more than 5% and Ebita by around 25%. The Ebita outlook excludes Havas, the communications company in which Vivendi acquired a majority stake from Bollore SA (BOL.FR) last summer.
At 1052 GMT shares traded 1% down at EUR24.06, after falling nearly 5% earlier in the session.
"[T]his 'mini-warning' leaves the valuation...looking more stretched than ever," said Conor O'Shea, head of European media sector at Kepler Cheuvreux.
Mr. O'Shea said the market is aware that Canal+ is a "complicated turnaround story," which may help soften the blow to the share price Friday.
Liberum called the changes to guidance "relatively minor," noting that Vivendi's music business "is very much on track."
Vivendi said Canal+ saw a "satisfactory development" in the number of pay-TV subscribers in France, and growth elsewhere is positive. Ebita, excluding restructuring, is expected to increase more than 30% to 365 million euros ($437.6 million), compared with a previous target of around EUR350 million. By 2019, the company's Ebita goal is EUR500 million.
Universal Music Group's momentum in the fourth quarter should lead to revenue growth of about 10% and an increase of nearly 20% in Ebita at constant currency, Vivendi said.
Mr. O'Shea at Kepler said he sees several years of recovery ahead in the music sector, given further paid-for streaming penetration and better monetization in ad-funded streaming. Kepler expects growth at UMG nevertheless to slow this year after an 'exceptionally strong' line-up of major artist releases in 2017.
The French media company releases its definitive earnings on Feb. 15.
Write to Marc Bisbal Arias at firstname.lastname@example.org
(END) Dow Jones Newswires
January 12, 2018 06:15 ET (11:15 GMT)