Melrose Industries PLC (LSE:MRO, OTC:MLSPF) fell over 6% on Friday and dragged down defence peers after facing a double downgrade from UBS analysts.
The FTSE 100-listed defence firm’s rating was slashed from a ‘buy’ to a ‘sell’ by UBS, while Melrose’s share price target was wound down from 770p to 400p.
UBS said this was due to the company’s revenue and risk-sharing partnership (RRSP) portfolio being significantly overvalued.
This sees the company share in aftermarket profits with the likes of airlines and other companies following engine sales.
According the UBS, the portfolio is worth £2.8 billion and less than half the £5.7 billion value cited by the company’s management.
Melrose fell 6.1% to 479.97p on the downgrade, while peers BAE Systems PLC (LSE:BA.) and Rolls-Royce Holdings PLC (LSE:RR.) dipped 0.7% and 0.2% respectively.