Shares of Zee Entertainment Enterprises continued to slump for the fifth straight session on Tuesday. Analysts at Emkay Global remain negative on the stock’s prospects going forward.

The Zee Analyst: Pulkit Chawla for Emkay Global upgraded the stock’s rating from “sell” to “reduce” but trimmed the price target to ₹150 from ₹165.

The Zee Thesis: In its latest research note, the brokerage said that following the breakdown of its merger with Sony, Zee’s management and board have outlined a comprehensive plan to regain lost ground. However, analyst highlights challenges in replicating Zee’s past superior performance, given the altered dynamics of the industry and intensified competition.

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Emkay anticipates a deterioration in Zee’s near-term performance due to the implementation of these initiatives, exacerbated by ongoing legal disputes. The decision to withdraw the merger application with the National Company Law Tribunal (NCLT) could signal Zee’s openness to new partnerships or acquisitions, which may lead to a re-rating of its valuation.

Emkay expresses concerns about Zee5’s impact on the company’s margins and anticipates a potential slowdown in revenue growth as efforts focus on reducing losses. Legal challenges, including disputes over cricket rights and ongoing regulatory issues involving Punit Goenka, add to Zee’s challenges.

The brokerage added that the rating upgrade was due to the fact that the stock has gone down around 24% since its last note. The analyst sees limited downside in the stock from here.

Price Action: Zee’s share price was down 1.61% to trade at ₹134.20 in early trade on Tuesday.

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This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.