Broker snap: Rising costs limit profits at ITE Group

16th May 2011 10:38

While "very buoyant current trading" has led Peel Hunt to raise its target price for ITE Group, the broker keeps its 'hold' rating on the events organiser, saying that profit growth will be limited in 2012.First half revenue of £53m came in ahead of expectations of £48m, and significantly exceeded the £39.2m reported in 2009. However, an underlying pre-tax profit of £9.4m - while above the £8.4m previously - was lower than the broker's estimate of £10.3m.ITE will relocate a range of key shows in 2012 to enhance exhibitor experience and help footfall, but Peel Hunt believes that this will come at an increased venue cost.Full-year (2011) revenue forecasts are raised but profit predictions are eased back, as rising costs are expected to create more pressure on margins.The target price is upped to 275p, from 255p.---BC