Goldman Sachs is now lowering its earnings estimates on Warner Music Group (WMG), according to an investor note issued early this morning. On the recent quarter, Goldman now estimates revenues of $738 million, a 13 percent year-over-year decline, compared to a consensus of $780 million. "We lower our estimates for Warner Music Group to reflect continued deterioration in music industry trends and a slight [year-over-year] decline in US album market share," Goldman Sachs vice president of Cable & Satellite and Mid-Cap Entertainment Research Ingrid Chung relayed. EBITDA targets were downgraded to $98 million, down 15 percent year-over-year.
Overall rating and pricing targets remain the same. Goldman is maintaining a 'neutral' recommendation on the stock, and keeping its 6-month target at $5.
The mellower mood follows a surprise pricing bump by Chung in April, though the enthusiasm is quickly getting curbed. In April, Chung pointed to "stabilizing music industry trends" and likened Warner to "the best house in a more stable neighborhood." Now, the discussion points shift to a slight drop in market share, and a broader album sales decline of 11 percent during the recent quarter - more aggressive than a year-ago dip of 7 percent.
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