We believe that Lavendon is a good quality company, with a strong management team and an attractive UK business. However, we have near term concerns over payment terms, pricing pressure and the economic outlook for the Middle East in a period of sustained low oil prices. We therefore make significant pre-emptive downgrades to our FY’17 forecasts (downgrading PBT by 16%) and introduce an FY’18 PBT forecast 16% below consensus. After these downgrades, Lavendon’s valuation looks undemanding, and we ....
18 Mar 2016
Downgrading on Middle East outlook
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Downgrading on Middle East outlook
We believe that Lavendon is a good quality company, with a strong management team and an attractive UK business. However, we have near term concerns over payment terms, pricing pressure and the economic outlook for the Middle East in a period of sustained low oil prices. We therefore make significant pre-emptive downgrades to our FY’17 forecasts (downgrading PBT by 16%) and introduce an FY’18 PBT forecast 16% below consensus. After these downgrades, Lavendon’s valuation looks undemanding, and we ....