Entercom Communications shares drop on downgrade

Entercom shares fell 84 cents, or 7.9 percent, to $9.85.

Analyst Frederick W. Moran downgraded the shares to "Hold" from "Buy" and lowered his price target to $9 from $14.

Moran said in a note to investors that he made the change mainly because he was concerned that tighter advertising budgets would lead to revenue and cash flow deterioration.

He said pressures on the consumer were lowering spending, which could lead to a decline in advertising demand at companies that buy ads on Entercom's stations.

"We believe that rising energy costs, a credit crisis and a slumping housing market have combined to create a recession for the U.S. consumer which will pressure advertising demand into 2009 as advertising budgets tighten to align with softening consumer spending," he said.

Moran said he expects second-quarter revenue to fall 5 percent and 2008 full-year revenue to drop 4 percent.

Entercom did not immediately respond to requests for comment.