Cosmetics company Warpaint (W7L:AIM) has suffered an 11.3% drop to 215p as sales in Europe remain flat compared to the first half of 2016.

While little detail has been offered by the company we believe today's share price slump is an overreaction by the market. Offsetting this disappointment is encouraging growth in the US, the world’s largest cosmetics market.

In the US, the company has delivered double-digit sales growth so far in 2017. It also remains optimistic about ‘encouraging growth’ opportunities across all of its sales territories worldwide, in spite of the brief slowdown in Europe.

Warpaint graph

Robert Sanders, analyst at broker Stockdale continues to view Warpaint's prospects positively. Importantly, he still believes that the company remains on track to meet his earnings before interest, tax, depreciation and amortisation (EBITDA) forecast of £7.9m this year to 31 December 2017, and £9.9m in 2018, figures that were upgraded in May.

He highlights internet sales as a growing contributor. He also points out several celebrity endorsements, from Love Island TV star Olivia Buckland and glamour model Maria Fowler, in helping create a buzz around the Warpoint brand. This social media tactic bodes well for online sales in the future.

Early sales of Warpaint’s Very Vegan product range - targeted for those who want to be vegan-friendly on the inside and out - are ‘encouraging,’ the company says.

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Issue Date: 26 Jun 2017