LONDON (ShareCast) - A profits warning from support services firm Mouchel has changed KBC Peel Hunt's already cautious stance on the stock to a negative one.
The broker has yet to discuss this morning's trading statement with
management but anticipates slashing its earnings estimates for fiscal 2009 by around 15%, while next year's earnings forecast will probably be cut by 25%, after the company warned that profits would be lower than expected this year.
"If we assume FY2010 earnings moving to 26.0p from 34.9p (including increased pension charge) this would put the stock on 9.5x . This is too rich, given the wider consulting group is on an average of 7x," KBC analyst Andrew Nussey believes.
"We see would the shares falling to around 190p (7.3x FY2010E). We therefore move our recommendation to Sell from Hold," Nussey concluded.
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