Shore Capital upgrades Ricardo to 'hold' after sell-off
By Benjamin Chiou
Date: Friday 07 Feb 2025
(Sharecast News) - A huge decline in the share price of Ricardo has prompted Shore Capital to upgrade its rating on the environmental and engineering consultancy from 'sell' to 'hold'.
Ricardo's shares have now dropped by around 50% since the start of 2025 alone following an update last week in which the company said earnings for the year ending 30 June would be below consensus expectations.
The profit warning was a result of the delay in orders across its emerging markets portfolio, prompting Shore Capital to scale back its EPS estimates for the next three years by 42%, 40% and 31% respectively.
"The real question is whether these orders are simply delayed or whether customers will scrap them entirely. We have concerns that the latter may be true as the energy transition agenda faces material challenges," the broker said.
These challenges arise from the Trump administration's hostile stance towards environmental initiatives and the potential for automotive manufacturers to be "caught in the crossfire of a trade war, which may reduce their willingness to spend money on emerging technologies".
Nevertheless, given the significant drop in shares recently, Shore Capital said the stock is now trading in line with its historical average valuation, which is "appropriate".
The stock was bouncing back 2.8% to 219p by 0839 GMT.
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