Lasers to life sciences technology business Gooch & Housego (GHH:AIM) is among the latest batch of UK-listed companies to warn investors that it could face a short-term queasy spell from the coronavirus.
The £333m AIM 100 constituent designs and manufactures various optical components used in microelectronics, semiconductor, telecoms networks and life science markets.
Today the photonics technology developer admitted that it remains largely in the dark about the impact of the coronavirus, saying that any fallout is ‘difficult to quantify at this stage,’ mainly because factories in China are only just reopening after an extended New Year break, but it ‘may act as a drag on this sector’s short term performance.’
The news came in a trading update ahead of its annual general meeting which will be held this morning at 11am.
CHALLENGED MARKETS
While the company expects to show ‘progress on last year’s result’ and plans to keep a close eye on how the coronavirus plays out ‘on our industrial laser products,’ Gooch & Housego remains stuck in challenging markets.
‘Trading conditions remain similar to previous trends, with strong subsea fibre couplers, aerospace & defence and life sciences’, said FinnCap analyst David Buxton.
But while Buxton highlights a ‘slight improvement’ in the firm’s microelectronics demand, the industrials lasers continues to be ‘challenging’.
Buxton’s sentiments were echoed by Luke Holbrook, analyst at Stifel. ‘Recent newsflow from key customers has pointed to an ongoing slump in demand in the industrial laser market, but with a possible recovery in 2020 now dependent on the impact of the coronavirus.’
RED PEN TO FORECASTS
FinnCap has cut back forecasts for both 2020 and 2021 by 12.4% and 6.2% respectively.
‘We reduce [2020] adjusted profit before tax by 12.4% to £15.6m, with earnings per share (EPS) reduced from 53.8p to 47.1p’, said Buxton, with 2021 profit at £17.8m and EPS ‘reduced from 58.5p to 54.9p’.
Shares in Gooch & Housego nudged close on 4% higher to £13.30, with many investors clearly anticipating worse.
