Warner Music Stock Falls On Anticipated Earnings Drop

Thanks to successful cost cutting and some fancy footwork, Warner Music has been a Wall Street favorite when compared to other music stocks. But by mid-afternoon Tuesday WMG stock was down 4.07% at $20.03 and falling after analysts downgraded the stock in expectation of weak fiscal
first-quarter results on Thursday. (Get the lastest stock price here.)

According to Reuters, Goldman Sachs lowered estimates for Warner’s quarterly revenue and dropped its price target to a still optimistic $25. "Our lowered estimates reflect greater than expected physical music declines that are not offset by digital growth," G.S. reported. Richard Greenfield of Pali said "the outlook for the U.S. music industry as a whole is currently not strong and that Warner would find it difficult to grow market share in 2007 the way it did in 2006". He downgraded the stock to a "sell".