JPMorgan downgrades Carillion after H1 results
By Michele Maatouk
Date: Thursday 25 Aug 2016
(ShareCast News) - JPMorgan Cazenove downgraded Carillion to 'underweight' from 'neutral' but lifted the price target to 250p from 225p following the group's first-half results.
It said the results showed progress in the support services business with organic growth and margin expansion. However, this was offset by a weaker performance in the Middle East, where profit fell 38%.
JPM said part of this was due to the non-repeating nature of a one-off benefit taken in the prior period, but said Carillion reported that the "oil price is affecting the investment plans of some countries".
In addition, overall pre-tax profit of £84.5m was 4% behind the bank's estimate and 1% behind Bloomberg consensus.
On the back of the results, JPM made changes to its divisional assumptions, revising up Support Services and down Middle Eastern construction.
Overall, its full-year pre-tax profit estimates for 2016/17 dropped 3%/1%.
The bank's target price on the stock was lifted as it rolled it forward to December 2017, now using full-year 2018 estimates.
At 1412 BST, Carillion shares were down 4.3% to 283.40p.
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