Berenberg downgrades Connect as it nosedives on dismal update

The bank chopped its price target on the stock to 40p from 140p as it cut its 2018-20 earnings per share estimates by around 30%. In addition, it said it now assumes an 80% cut to the dividend going forward resulting in a full-year dividend of 4.4p in FY18 and 2p in FY 2019/20.

"With the failure of the company to turnaround repeated poor performance in Tuffnells, as well as the departures of both the CEO and CFO, we believe the outlook and investment case for Connect to be unclear at present."

It also said it was prudent not to forecast a recovery in margins for the company's irregular dimensions and weight specialist, Tuffnells, until Connect has shown evidence of its turnaround.

Shares in Connect were down 44% to 29.11p at 1350 BST. Earlier, it also announced the departure of its chief executive and chief financial officers and said that In light of the revised profit expectations, the dividend for FY2018 will "at a minimum be substantially reduced from that paid in FY2017".

The group, formerly known as Smiths News, highlighted a material drop in volume and increased cost through the peak for specialist irregular dimensions and weight (IDW) freight/parcel handler Tuffnells, higher costs in Pass My Parcel, disappointing sales of World Cup-related products in Smiths News and delays in realising planned cost savings across the group.