TalkTalk slumps on JP Morgan downgrade

1st Dec 2016 08:57

(ShareCast News) - TalkTalk was under the cosh on Thursday as JPMorgan Cazenove downgraded the stock to 'underweight' from 'neutral' and slashed the price target to 150p from 230p.The bank said the big drop in the shares since the first-half results reflects increased uncertainty about the future trading prospects for the company, an issue it expects to persist until at least the full-year results in May 2017 as TalkTalk attempts to reverse customer losses in its core consumer broadband business."Execution risk remains high, in our view, and a failure to stabilise the retail customer base could lead to further downgrades to consensus estimates," JPM said.The bank noted TalkTalk has been looking to stem the outflow of customers since the cyber attack through investments to improve network performance customer service, as well as a new pricing model. It said results of these attempts have been mixed, with initial strong re-contracting rates among customers reaching the end of promotional periods offset by churn among customers facing a price increase.JP Morgan also said it reckons a more conservative dividend policy would be appropriate in light of the current trading environment."This would provide a bigger liquidity buffer especially given the continued interest in 'full fibre' network projects," it said.At 0920 GMT, TalkTalk shares were down 5% to 151.80p.