Numis downgrades Diploma on cautious outlook

11th May 2015 09:54

Shares in technical products group Diploma were trading in the red on Monday after the company cautioned about headwinds to organic growth, prompting Numis Securities to lower its rating on the stock from 'add' to 'hold'.The broker it was shifting its stance following Diploma's recent strong share-price performance, with the shares having surpassed its 843p target price."We downgrade to 'hold' and would look for a better entry point into the shares," Numis said.The life sciences, seals and controls outfit increased revenues by 10% year-on-year to £163.2m in the six months to 31 March. Adjusted pre-tax profits rose by 6% to £29.3m, while the interim dividend was lifted 7% to 5.8p per share.Numis said results were "marginally ahead of our expectations"."However, we are lowering our forecasts fractionally (1-2%), to bring us in line with consensus, owing to a slightly more cautious outlook for organic growth in 2H15," the broker said, following comments from boss Bruce Thompson about "headwinds" to organic growth.The stock was down 3.9% at 814p by 10:50.