Smiths Group Plc (SMIN) fell the most in four months after the U.K. producer of security scanners said operating profit will be less than anticipated on several “adverse” contract outcomes and as its detection unit makes provisions for legal disputes.
The shares dropped as much as 5.5 percent in London, the biggest intraday fall since March 20. Smiths was down 2.8 percent at 1,352 pence as of 10:07 a.m., the largest decline among stocks on the benchmark FTSE 100 index.
“The final outcome of three contractual commitments entered into prior to 2010 are anticipated to be materially adverse to previous expectations,” London-based Smiths said in a statement today. Operating profit for the financial year ending July 31 will probably be as much as 15 million pounds ($22.8 million) less than anticipated, it said.
“On the back of the announcement from the company, we have reduced our 2013 margin expectation for the detection division,” Glen Liddy, an analyst at JPMorgan Cazenove, said in a note today. JPMorgan cut its recommendation on the stock to neutral from overweight, with a price target reduced to 1,460 pence from 1,500 pence.
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