LONDON (SHARECAST) - Regus's profit may have doubled in 2011, but they still weren't enough to meet Peel Hunt's forecast, with the broker maintaining its hold rating on the office space provider on Tuesday morning.
Pre-tax profit increased by 100% year-on-year in the 12 months ended December 31st to £45.5m, under consensus estimates of £50.6m and Peel Hunt's £47m prediction.
"Underlying profit in 2012E is expected to show better growth because of cost reductions, but growth costs are expected to dilute earnings even more, with 200 centre openings expected in 2012E vs 139 in 2011," noted analyst Andrew Shepherd-Barron.
He said that price and occupancy levels are not reported as showing strength ("prices are still not recovering despite occupancy now at good levels") and the outlook statement was not particularly encouraging.
"We believe that Regus is bumping along sideways, which would be consistent with the peer group (employment agencies, Adecco in particular). This may hold back sentiment," the analyst added.
While the broker reiterates its hold rating and maintains its forecasts, the target price is hiked from 75p to 110p to reflect a more "risk-preferring market".
Shares in Regus tanked today, trading down 7.62% by 10:59.
LONDON (SHARECAST) - Regus's profit may have doubled in 2011, but they still weren't enough to meet Peel Hunt's forecast, with the broker maintaining its hold rating on the office space provider on Tuesday morning.
