Broker snap: Panmure upgrades Genus despite results miss

3rd Sep 2013 15:55

The share price of Genus sunk sharply on Tuesday after full-year results from the animal sciences group failed to meet forecasts. However with a solid outlook for the current year, Panmure Gordon decided to raise its rating for the stock from 'sell' to 'hold'.In spite of the more positive stance, Panmure admitted that results came in slightly below its expectations. Genus said that revenue in the year to June 30th grew by just 1% to £345.3m (Panmure forecast: £366m), while operating profit rose 1% to £49.1m (Panmure forecast: £49m).The stock was down 9.26% at 1,342p before the close of trade.Nevertheless, the company said that good harvests are expected in the northern hemisphere which should result in lower input costs and an improvement in profitability in the dairy, beef and porcine industries. This in turn will lead to a gradual improvement in market conditions for its customers, said Chief Executive Karim Bitar."I am confident that 2014 will be a year of accelerating progress, both operationally and financially," he said.The upbeat outlook means that Panmure is forecasting a return to more typical mid-teens earnings growth of 16% to 64p per share, up from 55p previously."Our move to being 'sellers' in July 2012 was predicated on deteriorating end markets and a material slow-down in earnings growth for FY 2013. Since then the shares have underperformed the UK market by c11%," the broker said."However with an improving outlook and a return to more typical mid-teens earnings growth we move our recommendation from 'sell' to 'hold'."BC