Telecity, the data centre group, has slumped more than 10% following a badly received update.
The company said full year revenues had risen 15% to £325.6m and earnings climbed 18.4% to £153m, but it warned 2014 revenues would come in at between £335m and £362m, below analysts forecasts.
The news sent its shares down 75.5p to 654.5p, and Liberum analysts issued a sell note:
Revenue guidance for 2014 [is] 5% below our forecasts. Our preliminary expectation is for consensus EBITDA to fall 5% in 2014 and 10% in 2015. Greater focus on 'capital discipline' but medium term capex still expected to remain high. No update on a new finance director and the outlook unlikely to reassure a nervous market. Shares have been weak but likely to remain weak today.
The valuation needs to reflect the risks: a highly operational business model with risks asymmetrically weighted to the downside given current levels of utilisation and pricing. There are long term technology risks (e.g. server power efficiency) and a danger of higher churn (customer consolidation, low sales and marketing costs, contract renewals.
