Canaccord Genuity downgrades Electrocomponents

Broker Canaccord Genuity has downgraded Electrocomponents, saying its full year sales forecasts for the electrical parts distributor looked "optimistic". Electrocomponents, which distributes equipment for electrical engineering, said last week that second quarter trading had matched first quarter trends but UK sales had fallen and the year-on-year decline in first-half gross margin was set to broadly match the first quarter decline of 0.8%.Canaccord reduced its current year pre-tax profit estimate by 10% to £82.8m, downgraded its recommendation from 'buy' to 'hold' and cut its target price from 313p to 200pThe broker said: "Having downgraded our estimates and target price following the first quarter update in July as a result of a lower gross margin and increased foreign exchange headwinds, we now believe that in light of softening PMIs across Europe that our sales per day growth forecast of 4% for the full year looks optimistic."In light of the weakening PMIs and softening GDP forecasts in Europe combined with continued gross margin erosion, we are downgrading estimates."Shares in Electrocomponents dropped 1.8p or 0.87% to 204.4p at 16:11 in London.