Investec downgrades De La Rue due to cautious outlook

27th May 2015 11:14

Annual results from banknote printer De La Rue beat analysts' estimates, though a cautious outlook has prompted Investec to downgrade the stock.The broker cut its rating from 'add' to 'hold' and lowered its target price for the shares from 560p to 540p.De La Rue reported an 8% fall in revenue for the year to 28 March to £472.1m, while underlying operating profits plunged 22% to £69.5m. However, higher operating margins meant the bottom line surpassed Investec's forecast of £67m.However, looking ahead, the company said its 12-month order book had shrunk 21% to £243m, and pricing in recent tenders "continues to reflect the ongoing challenging market conditions"."Full year profits are ahead of our and consensus forecasts in what has been a very challenging year," Investec said."The cautious outlook does not give us any comfort that the headwinds, especially in currency are easing, and note that the current euro weakness against the US dollar is aiding European competitors."The broker said that, as it did the previous year, "we conservatively downgrade our EPS forecasts due to lack of visibility".The stock was down nearly 9% at 504p by 11:23.