Ricardo PLC (LON:RCDO) shares dropped sharply on Tuesday as the firm warned on full-year profits due to a slowdown in the automotive sector, alongside worries over the coronavirus outbreak.
Reporting interim results, the engineering and environmental consultancy firm said it anticipated “suppressed order intake” from the automotive industry in the US, China, and Europe, Africa and Middle East (EMEA) regions.
The coronavirus has already hit automotive and rail operations in China, with more disruption to come in client engagement, project delivery and business development, it added.
For the six months to 31 December, Ricardo saw its revenue rise by 2% to £192mln, but pre-tax profit dropped by 19% to £8mln.
In a note to clients, analysts at 'house' broker Liberum Capital cut their target price for Ricardo to 720p from 900p on the back of the profit warning but maintained a 'buy' recommendation on the stock.
They said: "With H2 typically accounting for c.60% of FY PBT, and the company having a June year-end, this has led us to reduce our FY20 PBT estimate by 25%."
Ricardo shares were down 11.6% to 672p on Tuesday afternoon.