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Nanoco plummets after major US customer signals end of contract

Nanoco is no stranger to share price collapses but this is a humdinger
Cadmium chemical symbol
Nanoco is a specialist in the development and manufacture of cadmium-free quantum dots and other specific nanomaterials

Nanoco Group PLC (LON:NANO) fell out of bed with a mighty crash on Friday after it failed to secure a renewal on a big contract.

Shares in the quantum dots specialist plummeted 71% to 9.3p, reducing the company’s market capitalisation to a mere £25mln, as the company said a major US customer had indicated a project for which Nanoco was providing stress testing and process optimisation will not continue beyond 2020.

READ Contract extension signed

The news is a major blow for the company, which back in January celebrated a 12-month extension to its contract with the unnamed US company.

Nanoco said the decision by its customer had nothing to do with the performance of Nanoco’s technology and it is exploring other potential uses for the technology with a range of customers, including the US customer.

The group still expects to deliver a cash break-even position, as previously announced, for 2019 and to have an end-year cash balance of around £6.0mln.

At this time, revenues and associated cash flows under contract for the next financial year ending 31 July 2020 amount to about £4.0mln, the majority of which are included in the forecast cash position at 31 December 2019.

Peel Hunt withdraws 'buy' rating

Peel Hunt said it was withdrawing its ‘buy’ recommendation and forecasts but noted the company has considerable intellecutal property that would be of value to a third party.

"Clearly, this is a major blow to the company’s prospects given that this was expected to move towards commercialisation in the short term," the broker said in a note to clients.

--Updates for share price and broker comment--

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