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Bottom Line: Multimedia's music

Tuesday 24 May 1994 18:02 EDT
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MULTIMEDIA fever has gripped the stock market all year. Thorn EMI, the first to dismiss such talk as mere hype, has been a major beneficiary and its shares have outperformed the market by more than 15 per cent this year.

This pushed Thorn EMI shares to a premium rating and left them looking over-exposed.

A few cautionary sounds from the company yesterday about a likely slowdown in US rental, a maturing CD market and a rising tax charge over the next few years, duly knocked the share price 28p lower to 1068p.

In reality, the onward drive in the company's core businesses, particularly music, is likely to deliver earnings growth of around 15 per cent on average over the next two years which more than justifies a prospective p/e of 17.5 assuming pre-tax profits fo pounds 405m in 1994/5.

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