Berenberg lowers target price on Midwich Group
Analysts at Berenberg lowered their target price on technology distributor from 620.0p to 500.0p on Monday following the company's unscheduled trading update.
Midwich stated that wider market conditions had not improved as it had previously anticipated. Although it noted the UK audio-visual market appeared to have stabilised since the group last reported on 3 September, other markets, specifically Germany, deteriorated further and management now expects current conditions to persist for at least the remainder of the year.
On account of the operational leverage in Midwich's business, Berenberg said operating profit will now be "significantly below" previous expectations, leading it downgrade FY24 forecasts by roughly 20% at the pre-tax profit and earnings per share levels.
"While the update is clearly disappointing, Midwich remains the leading global specialist professional AV distributor, and current performance is reflective of challenging markets felt across multiple sectors," said the German bank, which reiterated its 'buy' rating on the stock.
However, Berenberg added that as and when the backdrop eases, it considers Midwich well-placed to deliver against its medium-term growth aspirations.
Reporting by Iain Gilbert at Sharecast.com
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