Zotefoams PLC (LON:ZTF) had its full-year profit forecast slashed 25% by broker Peel Hunt after the specialist foam maker warned of disappointing sales due a weaker European market US for polyolefin foams.
The broker said its downgrades were “hugely disappointing” but that there is little the foam technology group can do to cut costs in the short-term, predicting profit before tax to fall to £9.5mln and cutting the target price to 630p from 750p.
Zotefoams issued a trading update on Thursday morning which indicated revenues for the second half of the year could come in £6mln below current market estimates and £2mln below the first half’s £42.3mln.
The company, which makes technical foams including for footwear giant Nike, already hinted at trading troubles in August’s half-year results thanks to reduced demand from car makers in a less stable political and macroeconomic environment.
Since that time, as well as the deterioration in Europe growth in the North American market also slowed after its first half was boosted by construction demand.
In a note, Peel Hunt repeated its ‘buy’ recommendation for the troubled tech company, stating that the long-term investment case remains intact.
Shares deflated 37% and are currently trading at 340p, down from a previous market close at 535p.