SHARES in Trinity Mirror, publisher of the Daily Mirror, suffered their biggest drop in almost seven years yesterday after Morgan Stanley cut its rating on the stock, citing lower-than-expected proceeds from asset sales.
Morgan Stanley reduced its rating to "equal weight" from "overweight". London-based shares in the company dropped 4.3 per cent to 475.75p.
Trinity said last week that the sale of regional newspapers would raise £450 million, £150m less than previ
ously expected.
"The crystallisation of gross asset proceeds at around £450m has removed a large part of our upside case," Morgan Stanley analyst Edward Hill-Wood said in a research note.
"We therefore have decided that better investment opportunities lie across the media sector."
Trinity's underlying performance is "accelerating" with advertising improving and a continued focus on cost savings, Hill-Wood said in the report. The sale of some of Trinity's regional newspaper titles will leave the company with a better regional portfolio, he said.
Trinity last week reported a first-half profit of £1.6m on cost savings and improved advertising sales. The company had a net loss of £122m a year earlier, when it wrote down the value of its regional newspapers.
All businesses showed better performance in the first half and "strong results" as the national and sports publications reflected improvements in ad sales, the company said.
The national newspaper unit, which includes the Daily Mirror and the Daily Record, reported a 22 per cent increase in operating profit.
Ad sales from websites within the regional unit grew 25 per cent in the first half.
