Numis Securities was responsible for a pull-back in shares of insulation products firm SIG PLC (LON:SHI) today, after downgrading its rating because its analysts feel the stock is up with events.
In a note to clients, the analysts at Numis cut their stance for the FTSE 250-listed group to ‘reduce’ from ‘hold’ while leaving their price target unchanged at 150p.
In late morning trading, SIG shares were 1.7%, or 3.1p lower at 175.4p.
The broker’s analysts said: “We acknowledge that management actions to date on the balance sheet and scope for cost savings etc provide SIG with a good recovery profile. However, we believe that the valuation is now up with events relative to our (unchanged) target price“.
They added: “We back management to make substantive changes, but headwinds in the UK (where profit recovery needs to be focused to be meaningful) could offset these actions and valuation looks high based purely on interims to date and ahead of the review conclusion in Q4 2017.”
Liberum says "too far, too soon"
Meanwhile, Liberum Capital analyst Charlie Campbell also thinks SIG’s share price has gone up “too far, too soon”, and repeated a ‘sell’ rating on the stock today, although he hiked his target price to 157p from 95p on margin recovery potential.
In a note to clients, Campbell said: “When Meinie Oldersma was announced as new CEO we saw him as a credible candidate to restore profitability, but we held off upgrading the shares as we were cautious ahead of a big fall in H1 profits.
“We have been surprised by how far the shares have re-rated and how soon. We now find the risk / reward balance unattractive.”