Shares in Gooch & Housego PLC (AIM:GHH) slumped after the optical components maker raised concerns about the prospects for the microelectronics sector and the likely impact of US - China tariff changes.
In a full year trading update on Thursday the company said it would look to manage such risks by continuing to diversify its business. It added that trading for the year ended 30 September 2018 had been in line with management's previous guidance.
READ: Gooch & Housego says current year started well, order book strong
“We have long been aware of the potential risks associated with the cyclical nature of the microelectronics sector and more recently with the impact of US/ China tariff changes,” CEO Mark Webster said in a statement.
“Our long standing response is to continue to manage these risks by diversifying our business and moving up the value chain. One third of our business is now in the aerospace and defence sector,” he added.
In August, the group acquired medical device maker VITL and US company Gould Fiber Optics, enabling it to double its life sciences business and boost its presence in North America.
In a note to clients, analysts at finnCap said that Gooch & Housego’s shares remain very highly rated, trading on an EV/EBITDA of 16.3x and a P/E of 28.2x for 2019.
The broker retained its 1675p price target but said it “takes note of the comment on cyclical microelectronics markets, which may be voicing caution on the exuberant recent share price.”
Shares in the company, which have risen 20% in 2018, were 4% down at 1,780p in mid-morning trade.