Somero Enterprises Inc (LON:SOM) saw its shares dive on Friday after torrential rainfall in the US in the first part of the year dampened its trading activity, causing the company to cut its full year forecasts.
The AIM-listed firm, which specialises in levelling machinery, said trading in the five months to the end of May had been below management expectations as the record amount of rain in the US, its largest market, led to project delays and in turn a slower rate of equipment purchases from its customers.
While Somero said it expected weather conditions and US trading to improve across the rest of the year, it predicted it would be unable to recapture the shortfall caused by the poor weather, and as a result revised its full year outlook downwards.
Jack Cooney, chief executive, said that while the company was “disappointed” by the revised outlook, it did not see any fundamental changes to its markets and continued to have an optimistic outlook for the rest of the year and beyond as customers returned to “more typical” levels of productivity.
However, in early trading the market was less upbeat, sending the stock down 18.7% to 288.8p.
House broker gets the scissors out
In a note, analysts at Somero’s ‘house’ broker finnCap cut their target price for the group to 420p from 465p on the back of the revised guidance.
However, the broker added that the announcement was a “short-term setback” and that the company remained a quality play based on its strong cash generation and dividend payouts.