Aveva facing end-market challenges, but Numis stays upbeat

10th Nov 2014 10:24

Plant and marine engineering firm Aveva beat Numis Securities' forecasts with its interim results, though the broker has scaled back its forecasts for the full year.Nevertheless, Numis kept a 'buy' rating and 1,810p target price for the stock.Results for the six months to 30 September were in line with the company's lowered guidance two months ago, with revenues of £85.9m and profit before tax (PBT) of £17.1m. Numis had expected £84.3m and £13.3m respectively."The outlook is in line (implying comfort with consensus PBT of £65-66m) although we take a cautious stance and pull our earnings per share forecasts back by 8-13%, with full-year PBT £60.7m versus £67.8m previously," said analysts David Toms and Will Wallis.They identified slowdowns in some of Aveva's end-markets, particularly in Brazil and Asia Pacific, but reassured clients that they were cyclical challenges not structural.Furthermore, the analysts said that "tightly managed" costs should absorb some of what they think will be a significant revenue slowdown this year. Costs are expected to total £147m over the full year, compared to its previous £166m forecast earlier in the year."On a near-term view we think estimate momentum will stabilise even if end markets remain challenging, which should drive a re-rating in the shares partway back to historic multiples, albeit on lower forecasts."Aveva's shares were up 4.7% at 1,461p by 10:54.