Broker snap: Margin guidance disappoints at Intertek, says Jefferies

Jefferies has maintained its 'underperform' rating and 2,900p target price for product testing group Intertek after the company disappointed with weak guidance for margins this year.Organic revenue growth of 7.0% in the first fourth months of the year was broadly in line with forecasts, though slightly below the 7.3% growth in the second half of 2012.However, the margin guidance for the full-year was the "key negative" of Friday's statement, Jefferies said, as a profit decline in the minerals business is likely to keep the operating margin more or less stable on last year."While we estimate that minerals is only 5.0% of group revenues the nature of the work is skewed towards higher margin and more cyclical gold and iron ore exploration activities based in the Pacific rim," the broker said.Jefferies expects full-year consensus estimates to move down by "mid-single digits". The broker currently expects Intertek to report a profit before tax of £356m for 2013 and earnings per share of 150.7p."In addition the spend of £9.0m on four acquisitions suggest a run rate below average at a time when acquired growth would be useful."BC