13th Jun 2024 13:44
(Alliance News) - The cut to immediate earnings expectations by Tracsis PLC was "disappointing", but its long-term future remains brighter, analysts on Thursday said.
Shares were down 12% to 790.00 pence in afternoon trade in London.
Tracsis is a Leeds-based company that provides software, hardware, data analytics and services for the rail, traffic data, and wider transport industries.
For the financial year ending on July 31, Tracsis anticipates revenue in a range of GBP80.0 million to GBP82.0 million.
This compares closely to the GBP82.0 million revenue generated in financial 2023, but Liberum noted it is slightly below the prior consensus expectations for GBP85.0 million.
Chief Executive Officer Chris Barnes said: "While the impact of the pre-election restrictions coinciding with our busy final quarter of the financial year is unquestionably disappointing, this is an isolated event outside of our control."
Due to the UK general election, train operators alongside central and local government are restricted from making decisions relating to spending in the transport sector, causing the rescheduling of various projects and fewer orders in the fourth quarter.
"Overall, the momentum in the group remains strong and our market opportunity continues to grow, especially in North America...We look forward to returning to business-as-usual across our affected UK businesses, as we emerge from the UK election period", Barnes said.
The company does not expect any changes in government in both the US and UK to impact its growth prospects going forward.
Stifel said while "we knew that expansion in the US region was subject to timing issues, we had assumed that any variance to it could have been made up for in the UK".
"However, the earlier-than-expected election has closed the door to any new UK business contract awards in the six-week period up to it, and this has led to a revenue expectation 4% to 6% below consensus."
But Stifel thinks this is a "one-time election effect and investors should look beyond it or take advantage of any share price weakness".
Liberum said the degree of downgrade was "disappointing".
"This is a transitional period for Tracsis, which needs to get ahead of the expectations curve," Liberum suggested.
By Jeremy Cutler, Alliance News reporter
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