Broker snap: Pace sluggish at Speedy Hire

12th Oct 2009 12:31

Panmure Gordon has turned bearish on Speedy Hire after the plant hire firm saw little sign of the normal seasonal pick-up at the start of the second half of its financial year.The broker has reduced its earnings forecasts for the company following Monday's trading update. 'First half turnover has been lower than we expected at -29%, with further cost cutting undertaken as a result and the footprint of the operation reduced further,' the broker said, adding that the second half of the company's financial year has got off to a downbeat start.The broker expects that despite the cost cuts Speedy Hire has implemented, 'the result on the bottom line will still be severe,' with little scope for further cost cuts that would not endanger the long term health of the business. 'Understandably, cutting further into the operational footprint and cost base could significantly damage the upside potential when demand increases and reduce the potential upside, though this means we may well get more pain before gain,' the broker said.Panmure Gordon has trimmed its share price target to 24p from 28p and cut its rating on the shares from 'hold' to 'sell'.