Deutsche Bank downgrades Smiths to 'hold'

25th Sep 2018 12:11

(Sharecast News) - Deutsche Bank downgraded engineer Smiths Group to 'hold' from 'buy' on Tuesday, cutting the price target to 1,665p from 1,740p, saying it was time to take a step back.The bank reduced its EBITA assumptions for the company by 3% for both 2019 and 2020 and its earnings per share forecasts by 5% and 4%."Following a change of management in 2015, a renewed strategy, increased investment and portfolio rationalisation there was a view that Smiths was evolving. While this is still the case in certain respects, it has relapsed into the earnings downgrade cycle that was prevalent 2012-2016," DB said.Smiths said last week that it returned to growth last year as underlying revenue increased but currency swings and reclassification of costs sent reported annual profit down 8%.Underlying revenue rose 2% to £3.2bn in the year to the end of July though reported revenue fell 2%. Reported operating profit fell to £544m from £589m.At 1315 BST, the shares were flat at 1,501p.