(Alliance News) - Liberum on Friday moderated its revenue outlook for Hotel Chocolat Group PLC after the company warned on earnings again.
The Hertfordshire, England-based chocolate maker's shares were down 12% at 122.90 pence each on Friday morning in London. It now has a market capitalisation of GBP169.0 million.
The broker rates the stock at 'buy' with a 180.0p price target, downgraded from 300.0p, however.
Liberum said today that trading in Hotel Chocolat has been "a little softer" in the fourth quarter of financial 2023, which ends on July 2.
Liberum added that it has "moderated" its revenue forecast for the firm to "de-risk numbers following recent macro-economic deterioration".
It now expects it to achieve annual sales of GBP199.6 million, cut from its previous forecast of GBP203.4 million. Liberum's forecast represents a 12% fall from the GBP226.1 million revenue Hotel Chocolat achieved in financial 2022.
Hotel Chocolat on Friday said it expects to deliver an underlying marginal pretax loss for financial 2023. For financial 2022, underlying pretax profit was GBP21.7 million.
For financial 2024, it expects sales and underlying pretax profit to be lower than current market expectations due to ongoing weakness in consumer sentiment and continuing inflationary pressures.
Hotel Chocolat targets an earnings before interest, tax, depreciation, and amortisation margin of 20% for financial 2025, though Liberum cast doubt on its ability to achieve this.
"While our numbers are more prudent this does not mean we are not confident in the delivery of the levers that will, over time, deliver the 20% Ebitda target," analysts at the broker said.
It said: "Our numbers reflect a more prudent outturn leaving material upside to forecasts if management hit these targets by the end of FY25. We remain buy purely reflecting how far the shares have fallen, that more than bake in the latest round of cuts."
Back in March, the firm reported pretax profit in the six months to December 25 of GBP8.3 million, down 59% from GBP20.4 million the year before.
In April, it had warned annual sales would be "slightly lower than market expectations" amid a weaker Easter than it had forecast.
By Xindi Wei, Alliance News reporter
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