Darktrace tumbles as Peel Hunt starts coverage at 'sell'

Peel Hunt noted that the company has experienced an average annual returns compound annual growth rate of 49% over FY18-21.

"Its growth has been driven by its powerful go-to-market strategy, targeting the need for companies to strengthen their cybersecurity defences," the broker said.

"While we believe strong growth rates will continue, we also see a disconnect between the valuation and the ultimate revenue opportunity.

"Having considered the potential market size, the intensifying competition, and Darktrace’s limited R&D spend, we take a more grounded approach to our valuation, giving a target price of 473p."

Peel said this implies 50% downside.

At 1050 BST, the shares were down 20% at 752.50p.