23rd Apr 2015 09:46
LONDON (Alliance News) - Investec and Liberum both highlight slowing production rates for aircraft and some challenging conditions in certain end markets as reasons to retain a cautious stance on technology components and systems manufacturer Senior.
Investec said the trading update from Senior was more cautious than normal due to slower production rates for the Airbus A330 and A350 jets. Though North American truck volumes are holding up well and the company is seeing some beneficial currency moves, these positives are offset by softening mining, agricultural and oil and gas end markets, Investec argues.
The broker said it cuts its 2015 pretax profit estimate for Senior by GBP2 million to GBP112 million in order to reflect these ongoing underlying challenges.
Investec retains its Sell rating and 330 pence price target on the stock, saying the earnings growth profile of the company does not justify its current valuation.
Both Investec and Liberum note Senior's warning that its earnings will be more second-half weighted than has historically been the case.
Liberum downgraded the company to Hold last week, and though it says it remains attracted by Senior's growth and historic cash generation, the recent strong run for the share price, combined with slowing aircraft orders, mean it has to temper its optimism.
The broker has a Hold rating and 360 pence price target on the shares.
Senior shares are down 5.7% to 325.46 pence on Thursday, the worst performer in the FTSE 250.
By Sam Unsted; [email protected]; @SamUAtAlliance
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