Investec puts Meggitt rating under review after profit shortfall in H1

5th Aug 2014 11:01

Earnings downgrades for Meggitt are likely, according to Investec, which put its rating for the stock under review following a worse-than-expected first half from the aerospace engineer.The company said on Tuesday that underlying pre-tax profits were down 21% in the first half at £143.8m, well below Investec's £157m forecast, with margins dropping much more than expected.Meanwhile, revenues of £718.9m were down 11% year-on-year and under the £728m pencilled in by the broker."The outlook statement was mixed, but given slower growth assumptions (circa 2% 2014 organic constant currency revenues) and a range of issues, including at Heatric (Energy), we are likely to lower our 2014 earnings per share forecast by 7-8%. This still leaves a heavy second-half bias," said Investec analyst Rami Myerson."Meggitt's recent performance has been disappointing, and likely to impact the potential for a re-rating. Our rating, target price and forecasts are under review, but we are generally more cautious."The stock was down 7.2% at 467.4p by 10:34.BC