Broker snap: Begbies hit by low insolvency levels

22nd Dec 2010 13:11

Broker finnCap has cut its forecasts for Begbies Traynor as the broker says conditions remain challenging for the financial adviser and insolvency practitioner.Begbies said in its interims that revenues were down 9% to £27m on the previous year, and profits declined 26% to £6.4m, reflecting fixed cost pressures.The broker says that the second half is usually stronger for the group, however the 17% decline in insolvency numbers during the first half "suggests that it is appropriate to take a cautious line on profit expectations for the second half and beyond."The broker has cut its pre-tax profit forecast for 2011 to £8.7m from £10.7m, leaving the earnings per share estimate at 6.3p."2012 profits will be helped by cost cutting but, despite shares reaching new lows, we believe it is too early to make a case for a return to a premium rating," the broker adds.A target price of 65p is confirmed, with a 'hold' rating.