Broker Cantor Fitzgerald has reduced its target price for Directa Plus Plc (LON:DCTA) to 80p from 150p and downgraded its rating to ‘hold’ from ‘buy’ after today’s warning on 2017 revenues from the graphene-based products group.
Directa, which is developing consumer and industrial markets for the wonder material, said it expects a significant reduction in anticipated revenues for in the current year albeit as it reported 2016 results showing graphene revenues rose strongly.
READ: Directa Plus warns of "significant reduction" in 2017 revenues after 2016 jump
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In a note to clients, Cantor analyst William Game said: “Whilst FY2016 revenue of €0.82m was below our €1.11m forecast, sales of graphene (G+) products grew by an impressive 89% to €0.74m, and the Board is confident in the long term direction of travel.”
“However,” he added, “a ramp up in sales is naturally dependent on customer development and sales cycles and it is believed this could take up to 12 months longer than previously expected in some cases.
“Vittoria has also guided management to significantly reduced demand for its G+ tyres in FY2017.”
The analyst said “In light of this and commercial prospects across other geographies, management has taken the prudent decision to delay capex in Thailand, to assess potential sites in other regions.”
But, he added: “The pipeline is strong, but will require the delivery of positive news flow in 2017 to underpin our sales expectations and demonstrate on-going headway.”
In late morning trading, Directa shares were off earlier lows but still down over 22%, or 20,0p at 70.5p, still below the 75p per share level they floated at nearly a year ago.