Broker snap: Questions surround outlook at De La Rue

23rd Nov 2010 12:59

Uncertainty surrounding bank note volumes and margins on new orders has prompted Panmure Gordon to retain a 'sell' for bank note printer De La Rue. While the broker reviews its forecasts, it suggests that the full-year outlook remains negative.The broker remains cautious over the resolution of paper orders after De La Rue experienced problems at a paper production site.While profit impact from paper problems were in line with broker expectations at £12m, the first half operating profit of £27.8m was significantly lower than the £51m reported last year.The broker says that the outlook is "very uncertain to be frank - with a number of important questions still to be answered: will bank note volumes return?...will deliveries to the Bank of Ireland resume?...and what will the knock-on effect on margins for new orders be?"The broker has a 529p target price and a 'sell' recommendation for the stock.