Premier Farnell has seen its shares drop sharply on worries about falling profit margins.
The electronic components specialist is down 8.3p or more than 4% to 181.4p - the biggest faller in the FTSE 250 - after it said first half operation profits would be slightly below last year, as it restructures its marketing and distribution specialist.
First quarter sales rose 5.4% - helped by a strong performance from single-board computers including Raspberry Pi - but gross margins were down 1.2 percentage points compared to the fourth quarter last year. Analyst Robin Speakman at Shore Capital kept his hold rating, saying:
An encouraging sales performance in our view, but we remain concerned over margins (noting a 200 basis point decline in the gross margin for the period). We continue to watch the Americas performance and signs of a return to economic margins closely.
Elsewhere among the mid-caps, Playtech is down 20p at 788p after the online gaming company unveiled plans to raise £250m to fund its purchase of foreign exchange trading business Plus500, as well as other possible acquisitions.
Northland Capital Markets analyst Michael Campbell said:
The equity fund raise and new debt facilities should result in a more efficient capital structure for the business. Entry into the financial sector diversifies the business and exposes it to a fast growing new sector. The PE rating for Playtech is toward the top of the peer range at around 17 times 2015 consensus earnings however the business has significant firepower with which to continue to grow into new markets and new product verticals such as the financial sector.
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