Stifel Nicolaus downgraded Arbitron (ARB
) to sell from hold, explaining that the media and marketing research firm ended its deal with Nielsen Media Research.
Analyst Kit Spring says Nielsen will not exercise its option to participate in the development of Portable People Meter (PPM), Arbitron's new electronic radio rating's measurement device. On the positive side, Spring says Arbitron is now free to step on the gas on deploying PPM itself. However, on the negative side, Spring notes that Arbitron must now completely fund the costs of PPM, after having expected those costs would be shared with Nielsen. Spring believes the return on investment in PPM is increasingly uncertain. The analyst cut a $1.67 2006 earnings per share (EPS) estimate to $1.64, but keeps a $1.59 2007 estimate, which is sharply below the consensus of $1.84.