Shares in Cerillion tumbled 16% to 747.6p on Monday after the telecoms software supplier warned that revenue for its current financial year would fall well short of City expectations.
Cerillion, an AIM-listed company that sells billing and customer management systems to telecoms operators, said full-year revenue was now likely to come in between £46 million and £48 million.
That compares with a market consensus of around £53 million.
The company blamed the shortfall on the delay and deferral of orders from both new and existing customers, covering licences and services.
Most of the miss falls in the second half, where Cerillion now expects £28 million to £30 million of revenue against just £18 million in the first six months.
The warning prompted Panmure Liberum, the company's broker, to cut its target price sharply to 1400p from 2000p.
The broker also reduced its forecasts for pre-tax profit and earnings per share by 17%.
A large contract with Omantel, the Omani telecoms group, was signed later than first expected and proved too small to close the gap, Panmure said.
The broker estimates the deal will contribute £10 million to £12 million in the second half, and believes the relationship could expand over time.
Despite the downgrade, Panmure kept its buy rating, arguing that Cerillion remained a growth business built on cheap, off-the-shelf products that are quick to install.
It expects the company to reassert its case for winning market share when full-year results are published in November.
Cerillion described its new customer pipeline as healthy.
The shares had already been under pressure ahead of Monday's update, falling 37% over the past year.
On the broker's revised numbers, the stock trades on about 11 times enterprise value to earnings before interest, tax and amortisation for 2027.
Panmure regards that as attractive against the company's medium-term growth potential, pointing to a compound annual revenue growth rate of 18.5% over the five years to 2024.
The broker's reduced price target still implies substantial upside from the current level, leaving its recommendation intact even after one of the group's rare setbacks.
