Numis downgrades Regus, says shares 'up with events'

Regus slumped on Wednesday, suffering a second day of losses as Numis downgraded its stance on the stock to ‘hold’ from ‘buy’ following the company’s first-half results, saying the shares are up with events.

The FTSE 250 workspace provider said on Tuesday that first-half profit rose 7% to £84.3m on revenue of £1.08bn, up from £937m in 2015. However, it warned of “softening revenue growth” in some of its markets.

Numis said: “H1 results were in line with expectations. A softening in trading conditions leads to an underlying earnings downgrade. However, an emphasis on cost efficiency, cash generation, returns and a disciplined approach to capital allocation is positive for the operating model over the medium term.”

The brokerage downgraded its revenue growth assumptions but left its estimate for full-year 2016 earnings before interest, tax and amortisation at £197m.

“The focus on cost control, returns, and greater capital discipline are encouraging. However, given the increasingly uncertain macro outlook and the breadth of the slowdown experienced in Q2, we believe the shares are up with events in the short term.”

Numis maintained its 300p price target on the stock.

At 1150 BST, Regus shares were down 5.3% to 304.10p.