David McCann from Numis Securities has cooled on Arbuthnot Banking Group moving from a ‘buy’ to a ‘hold’ following the recent AGM statement.

McCann cut his earnings per share (EPS) forecast by 26% from 20.3p to 15.1p after the company warned that difficult market conditions were affecting its investment banking business Arbuthnot Securities.

‘The earnings downgrade is large but this is a highly operationally geared business so a small change in revenue can have quite an impact,’ comments McCann.

McCann is one of only two independent analysts covering the fledgling financial services company. The broker’s new ‘hold’ recommendation brings him closer into line with Will Howlett from Fox-Pitt Kelton who ranks the stock an ‘underperform’. Like other stockbrokers and corporate finance houses the recent market decline is having a distinct chill on activity with trading volumes tailing off together with a decline in new issues.

by Simon Keane