Berenberg starts Laird at 'sell'

Laird was under the cosh on Thursday as Berenberg initiated coverage of the stock at ‘sell’ with a 230p price target following the company’s first-half results.

“After reporting a weak first half, with profit before tax missing estimates by between 30-40%, the market seems to have shrugged off what we saw as a profit warning.”

The bank said that in order to meet consensus numbers, Laird must deliver an “exceptional” second half, which it struggles to see happening given headwinds facing the industry and business.

“These issues, compounded by the resignation of CEO David Lockwood yesterday, lead us to initiate with a sell recommendation,” it said.

Berenberg pointed out that consensus currently estimates Laird will generate about £80m of pre-tax profit this year, despite the first-half numbers showing pre-tax profit of only £16.4m.

As a result, Laird would have to deliver a weighting of around 80% for the second half, which the bank said it had never done before.

“We forecast Laird is heading into H2 2016E with a £14m PBT shortfall and believe the chance of recovering this is highly unlikely.”

At 0915 BST, Laird shares were down 3.1% to 298.51p.