WS Atkins slumps on Liberum downgrade

21st Nov 2016 09:36

(ShareCast News) - WS Atkins was under the cosh on Monday as Liberum downgraded the stock to 'hold' from 'buy' and cut the price target to 1,600p from 1,720p after the company's first-half results last week.The brokerage said first-half fully diluted earnings per share were exactly in line, with 13% EPS growth and £3.3m debt provisions above the line.However, it cut its 2018 FD EPS estimate by 4%, mostly due to the lack of US pipeline and despite FX tailwinds.It said the performance of the group's Projects, Products and Technology business was disappointing from an earnings and cash perspective.Liberum increased its net debt estimate from £1m to £39m following a weak H1 and said the target price cut reflects lower earnings expectations, a higher pension deficit and higher debt.Still, the brokerage said there are plenty of opportunities for growth across the divisions."A strong pipeline of projects in the UK gives clear potential for Atkins. We expect this will be re-confirmed in next week's Autumn Statement. North American infrastructure is expected to be boosted by Trump's 'commitment' to spend $1tn on infrastructure during his Presidency. For Atkins, direct benefits will come from the implementation of the FAST Act in 2017."At 1015 GMT, the shares were down 4.3% to 1,504p.