The stock fell 9.5% yesterday to 248p following a bleak first quarter trading update, taking it below Goldman’s 12-month price target of 253p (down from 255p previously).
“Still a sell”, was the investment bank’s verdict in a research note issued this morning, but that was before the shares tanked further, shedding another 9.8% today at 242.1p.
The bank continues to expect pressure on free cash flow from less positive working capital and higher capital expenditure in the coming years.
It has updated its estimate to reflect a better revenue contribution from the newly acquired QTS business, which is now expected to provider a £25mln tailwind for the full year vs. £20mln previously; slightly slower organic revenue growth in Global Products in fiscal 2018 (FY18E in broker-speak), which is now projected at 1.1% vs. 3.7% previously; and a higher effective tax rate (13% vs. 10.6% previously).
Its FY18E earnings per share estimate has been trimmed by 3% to 16.45p from 17.05p.