Promethean World Plc (PRW) dropped the most in more than a month after the maker of electronic equipment for classrooms said first-half revenue fell 16 percent as government spending cuts in the U.S. hurt sales.
“Our results are in line with market expectations, with a noticeably lower rate of revenue decline than in 2012,” Chief Executive Officer Jim Marshall said in a statement today. “For the full year, we are not counting upon any improvement in market conditions and will continue to manage our business prudently.”
The stock of the Blackburn, England-based company dropped as much as 9.8 percent to 15 pence, the biggest intraday decline since June 14. The shares traded at that level at 1:43 p.m. in London even after analysts at Investec raised their recommendation to buy with a target price of 25 pence, which suggests the shares may advance 67 percent.
“It’s too early to call growth in its end markets but with the balance sheet stable, forecasts seemingly bottoming and its strong market position, there should be upside to these depressed levels,” Julian Yates, an analyst at Investec, wrote in a note to investors today.
First-half sales declined to 70 million pounds ($106.6 million), compared with a 23 percent fall in the corresponding period in 2012. Revenue in North America fell 15 percent to 38 million pounds.
“We understand that the company is getting feedback that many U.S. districts are more positive on the budget outlook versus previous years,” Yates said in the note. “It’s very early days and as such we would not want to over-hype this, but it is encouraging.”
Promethean, chaired by Orange co-founder Graham Howe, signed a new 25 million-pound bank facility, which matures in September 2017, according to today’s statement. Its cash balance rose 7.1 percent to 9.1 million pounds at June 30.
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