Charles Stanley downgrades Rolls-Royce to 'reduce' after profit warning

6th Jul 2015 12:16

Charles Stanley downgraded Rolls-Royce to 'reduce' from 'hold' following the company's profit warning and the scrapping of its share buyback programme on Monday."The announcement is yet another blow to investor confidence following a difficult 2014, characterised by a series of profit downgrades, and we expect the share price to respond negatively," it said.The brokerage added that it expects to see material cuts to consensus estimates following the warning.In the longer term, however, Charles Stanley said the company should realise the benefits of a much larger Civil Aerospace installed base, more efficient manufacturing footprint and supportive growth drivers in Land & Sea.Still, "the group will remain in a transition period up to 2017, during which time it will face execution risk and free cash flow is likely to remain weak."At 1249 BST, the company's shares were down 8.3% at 785.30p.