Stadium still optimistic about 2012 - UPDATE

Electronics group Stadium said that the weak demand is expected to persist throughout the year as previously highlighted last month but it still remains confident about its performance for 2012."Overall, first half trading will be lower than the equivalent period last year and within our expectations," the group said on Thursday ahead of its annual general meeting (AGM). Nevertheless, Stadium reassured that "a number of legacy contracts with poor margins are being phased out, or renegotiated to secure better margins". The power business has also made a good start to the year."Progress in achieving operational improvements in overheads, plant efficiencies and most significantly in purchasing, is beginning to take effect and will deliver benefits during the second half of 2012," the company said.Taking the "glass half full" approach, house broker N+1 Brewin said the update "confirms that the current year will be strongly second half weighted (we now estimate in the region of 25:75) as recent operational initiatives and new business wins begin to contribute." The broker has reduced its sales forecasts for fiscal 2012 and 2013 by around £2m in both cases to reflect the phasing out of lower margin legacy contracts. N+1 Brewin expects the impact on profitability to be offset by the cost saving measures outlined by management, so its headline earnings forecasts for this year and next remain unchanged. "Notwithstanding current, soft market conditions, we continue to see significant medium term growth potential in the group, both organic and acquisitive, as management begins to deliver on the new strategy. We retain our 96p price target and buy recommendation," the broker said. Daniel Stewart is also standing pat with its 2012 forecast of profit before tax of £3.2m and its "buy" recommendation. On the target price, it is even more upbeat than the house broker, with a 12-month projection of 125p. The shares fell 6p to 79.5p in the morning trading session. BS/BC