PR and marketing outfit Creston (CRE) disappoints the market today as soft first half numbers lead it to warn full year results will fall ‘slightly’ short of expectations. A 15.8% fall to 117p is unsurprising given the shares had been on a decent run heading into the announcement.
However Liberum’s take on the results implies this is an over-reaction. It reiterates its ‘buy’ recommendation and price target of 190p, and notes the company’s five year strategy remains ‘on track’. The company is pursuing a more integrated approach between its different businesses under the Creston Unlimited banner.
In the six months to 30 September like-for-like revenue is up just 1% to £37.7 million – hit by a weak euro, temporary reductions in some clients’ ad spend thanks to their own weaker trading and a slower performance in UK health advertising. More positively the dividend is hiked 5% to 1.42p.
Liberum analyst Ian Whittaker adds: ‘The key factor is that the downgrade is driven by factors essentially outside of Creston's control (FX and clients temporarily changing plans) and not down to problems with its operations or strategy.’