Broker snap: Peel Hunt downgrades Homeserve after telesales suspension

31st Oct 2011 10:58

Peel Hunt downgraded emergency repair services firm Homeserve from hold to sell, after the group announced that it is to suspend its telesales operation after an independent review.Homeserve saw its shares plummet by over a quarter on Monday after audit firm Deloitte found "processes that did not meet the company's required standards." The firm responded by saying it has started "an immediate re-training programme for its telephone sales staff and is developing new scripts." Peel Hunt said that it has put its forecasts (and 450p target) under review but expects to cut profit forecasts for the year ending 2013 by around 10%."This adds to concerns we already have about international growth expectations and we believe reputational knock-on could affect US and international progress further," said analyst Henry Carver.Investec also published a note this morning, saying that it has put its buy rating and 630p target price under review following the news."We suspect the price fall will prove to be an overreaction, but until there is greater visibility on the extent of the issue and the risk, if any, of adverse publicity affecting other parts of the business and its ability to gain new partners, the shares are unlikely to rebound," said analyst Wayne Gerry.By 10:58, shares were down 29.61% at 341.6p.BC