Analysts at Canaccord Genuity lowered their target price on IT services firm Redcentric from 185.0p to 175.0p on Wednesday, stating input costs had impacted the company’s second half.
While Canaccord said Redcentric’s first half was broadly flat in terms of sales and adjusted underlying earnings, in line with its expectations, the group’s trading statement pointed to higher electricity costs to the tune of £500,000 for the second half, and at least the same again for 2023.
The Canadian bank also noted that the group’s Wednesday trading statement also commented on a general lack of large-scale IT projects and supply chain issues surrounding equipment sourcing.
Despite the supply chain issues Canaccord remains confident in its top line estimates, with group recurring revenue around 90%, and reiterated its ‘buy’ rating on the stock.
However, the analysts did reduce their EBITDA/EBIT by the additional incremental cost of the electricity supply contracts, leading to the lower price target.
Analysts at Berenberg downgraded Petra Diamonds from ‘buy’ to ‘hold’ on Wednesday, stating now was the time to take some profit.
Berenberg, which kept its 200.0p target price on the stock, said that since it upgraded Petra back in March, shares had rallied roughly 29%, outperforming both Lucara Diamond and Gem Diamonds.
However, it now thinks that the next six months offer some downside risk from a stock-specific standpoint, despite “a strong rough diamond market”, which will be supportive from an industry-specific perspective.
The German bank said its primary concern was Petra’s Cullinan project in South Africa as, while management explained the closing of one of eight production tunnels and the temporary suspension of production from 18 draw points, roughly 10%, due to ground instability, the analysts highlighted that the cause of the weaker ground conditions was unknown and that a time frame for the production outage was yet to be quantified.
“We see some risk to 2023 production and, while management has flagged potential mitigation factors, such as increased tailings production, this is lower value than the run-of-mine ore,” concluded Berenberg.
