Broker snap: HomeServe's 2013 forecasts now at risk, says Peel Hunt

8th Feb 2012 11:25

Peel Hunt has maintained its sell rating and 220p target price on emergency repair services firm HomeServe, saying it expects to make further cuts to 2013 forecasts."Nearly all the guidance given by the company before Christmas has been revised lower in this morning's IMS and, ahead of the conference call, we anticipate downgrading our FY2013E PBT [profit before tax] forecasts by c8%," said analyst Henry Carver.The group said that customer numbers for the full-year would be 8% lower than last year, worse than previous guidance of a 5% reduction. As a result of this and its continuing struggles with recommencing telesales activities, the company has decided to cut its UK headcount by 200 in order to focus on marketing and create a smaller outbound telephony operation. Peel Hunt says that with the shares trading at 10.7 times 2013 earnings ("pre-downgrades"), a premium to the Hoare Govett Support Services Index which trades at 9.4 times, it has no choice but to keep its sell recommendation."We do not believe the rating reflects the fundamentally lower margins and lower growth prospects for HomeServe, now that regulatory concerns are more acute, and that sales methods need to be tempered," Carver said.Shares were trading down 10.7% at 245.6p in mid-morning trade on Wednesday.BC