Shares in Reuters have fallen to an 11-year low off the back of a critical downgrading by investment bank UBS Warburg.
UBS Warburg is advising clients to reduce their holding in the stock after cutting its price target to 175 pence per share from 325 pence. The broker believes that Reuters faces "severe structural weaknesses" in its business.
At one point shares in Reuters touched 182.75 pence, recovering during morning trading to stand at 186.25, still seven per cent down on the overnight close and way off a year high of 815 pence.
The stock has lost 75% of its value this year as the downturn in financial markets has fed through to subscription cancellations for Reuters' financial information and terminal business.
UBS Warburg points to Bloomberg's ascendancy in the market for premium news and information and the gradual decline in income from Reuters' foreign exchange monopoly. The broker gives Bloomberg a 40% revenue share lead in the delivery of information services to bank trading rooms, with Reuters' trailing on 32%. If bank spending continues to fall, cautions UBS Warburg, Reuters is likely to see its position weaken still further.
Warburg's analysis is shared by others in the market, who believe that Reuters may have to revise its earning forecast downwards when it reports third quarter figures next week.