S4 Capital PLC (LSE:SFOR) has lowered expectations for revenue and its core profit margin for the second time in two months following a slow summer.
As a result, Peel Hunt said it has downgraded its net revenue estimates by 6%, EBITDA by 22% and EPS by 36%.
“It is disappointing to see another significant downgrade for S4,” it said.
The broker has cut its price target to 110p from 180p and its recommendation to 'add' and shares in the firm tumbled 22% to 74.45p.
The advertising firm warned full-year like-for-like net revenue is now expected to be down on the prior year and operational EBITDA margins are now targeted to be in the range of 12% to 13.5%.
In July, the company forecast revenue growth between 2% and 4% and an operational core profit margin of between 14.5% and 15.5%.
Chair Sir Martin Sorrell said: “We had a very mixed first half of the year reflecting challenging global macroeconomic conditions and consequent fears of recession, which resulted in client caution to commit and extended sales cycles, particularly for larger projects.”
The warning came as the group unveiled results for the six months to 30 June 2023.
Revenue rose to £445.5 million against £375.3 million, reflecting the challenging macroeconomic conditions compared to last year and clients' caution, with longer sales cycles, particularly with technology and newer regional and local clients.
Billings climbed 21% to £925.4 million and the loss narrowed to £19.7 from £82.3 million.
S4 said it would consider a dividend of at least 1p per share when the final results for 2023 have been determined.