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Why Credit Suisse just downgraded Nine Entertainment Co Holdings Ltd

It’s been a stellar 12-months in terms of share price growth for media entertainment group Nine Entertainment Co Holdings Ltd (ASX: NEC) with today’s share price of $2.20 up 84% from its $1.19 share price at this time last year.

Credit Suisse has today downgraded Nine Entertainment Co from outperform to neutral and increased FY18 earnings estimates by 2.9% to “reflect the strong start by Nine to the 2018 ratings year”. It also raised FY19 estimates by 8.1%.

The Credit Suisse broker rose the share price target from $2.10 to $2.35 for Nine with a “high-level of sustainable market share” now factored into the price as well as reasonable valuations for digital assets.

Shares in Nine Entertainment zoomed to a 52-week high on March 19 when they reached $2.39 with media peer Macquarie Media Ltd (ASX: MRN) also at the top of its game, but peers Fairfax Media Limited (ASX: FXJ) and HT&E Ltd (ASX: HT1) have not fared well over the same period, with Fairfax slipping 1.8% to 68c per share at the time of writing, and HT&E also down 1% to $1.82.

Nine fared well in its half-year report, increasing NPAT by 55%, easily beating out rival Seven West Media Ltd (ASX: SWM).

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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