Yellow Media (YLO-T 0.13 0.00 0.00%) shareholders watched the company's stock price fall from over $6 to less than 20 cents in 2011 as dividend payouts were suspended. Analysts at Scotiabank predict 2012 will be no better, with shareholders left holding worthless stock as the company refinances.
In a note to clients, Scotiabank analyst Paul Steep said Yellow Media's recent announcement of a Financing Committee is a sign of what's to come for shareholders.
"Our view is that under the current capital structure equity holders retain minimal value in their shares," he said. "We anticipate that a recapitalization event is likely to occur, resulting in significant dilution for equity holders."
Steep's new price target for Yellow Media is one cent, which he said reflects, "the nominal value that may be captured by equity holders through the upcoming recapitalization process."
As for Yellow Media's business, Steep sees no end to the bleeding.
"The firm's fourth quarter results reflect our view that Yellow Media is exposed to two of the most challenging areas in media, namely printed products and directories," he said. "In the quarter, growth in online revenues was not sufficient to offset the impact of declining print revenues on the business. We remain concerned about the continued acceleration in print attrition and compression in EBITDA margins."
Other analysts are just as pessimistic on the future of Yellow Media. Of the 12 analysts that cover the stock, 11 have 'sell' recommendations and one has a 'hold.'