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Risk Warning
08/06/2011
Shares in Smiths Group (SMIN.L) shed 1.4 percent as the British technology firm's trading update fails to excite, leading CFD specialist Prime Markets to repeat its "sell" rating on the stock.
Prime Markets says the interim management statement shows that sales at Smiths Group's John Crane division fell short of expectations, and while the group has managed to reduce net debt to 797 million pounds, down from 880 million pounds at its its March first-half results, it feels the number is still uncomfortably high.
"There is also little in the way of forward visibility or upside from the current position, so any possible upside could only come from a possible breakup or the selling off of one of the divisions," says Richard Curr, head of dealing at Prime Markets.
"As CEO Philip Bowman has absolutely ruled out any possibility of this happening, Prime Markets believes general weakness and lack of visibility will drive Smiths Group shares down to November 2010 lows of 1,125p in the coming 2-4 weeks," Curr adds.
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