En Masse, Analysts Downgrade MDC Partners Inc (NASDAQ:MDCA)


A raft of downgrades pummeled the MDC Partners Inc (NASDAQ:MDCA) stock after the advertising holding company issued a worse-than-expected earnings report, lowered guidance and cut its dividend.

The stock dived off a cliff, so to speak, plunging nearly 60% to close the day at $3.40, with 25.28 million shares changing hands. That was 27 times its average volume of 0.92 million shares.

Technically, the stock gave an ominous warning in July when it broke the neckline at $15.50 of a head-and-shoulders topping pattern on the monthly chart. Investors should have been in sell mode once the stock broke the $15 level.

On current reckoning, the stock appears to be on course to test its 2009 low of $1.10.

MDC Partners Inc (NASDAQ:MDCA) had a tough third quarter

For the third quarter, MDC reported an adjusted per share loss of $0.16, while analysts were looking for earnings of $0.22 per share.

MDC clocked revenue of $349.25 million, which missed by $5.05 million but grew 6.3% year on year.

“The third quarter was impacted by the many actions we are taking to position our business for long-term profitable growth and balance sheet strength,” said Scott Kauffman, Chairman and Chief Executive Officer. “We are reducing expenses, optimizing our partner portfolio, and re-prioritizing how we allocate capital, all while investing in our partners to ensure that they have the right resources to continue to drive outstanding performance for our clients.”

To conserve cash resources, the company suspended its dividend, saving it $11 million in cash per quarter.

MDC Partners Inc (NASDAQ:MDCA) lowers guidance

MDC lowered revenue guidance for the full year to the range $1.365B to $1.375B from the previous $1.39B to $1.42B, and cut guidance for EBITDA to the range of $170M to $180M from the previous $205M to $215M.

“Our lowered 2016 outlook reflects a diminished revenue recovery in the second half of the year as well as the upfront costs associated with our expense containment and restructuring initiatives,” said David Doft, CFO. “While we won’t see the payback this year, these actions will enable us to permanently remove approximately $30 million of costs on a run-rate basis.”

MDC Partners Inc (NASDAQ:MDCA) downgraded

Analysts at Wells Fargo, Wedbush and BMO Capital all downgraded MDC from Outperform to Market Perform, Neutral and Market Perform respectively.


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