FTSE 100 aerospace and defence firm Meggitt (MGGT) disappoints the market with interims light of expectations and reduced full year guidance. The shares are down 6.7% to 470p.

Pre-tax profits fall 20% to £98.2 million amid a weak contribution from its military-related business and ongoing currency headwinds which alone resulted in a £53 million hit to revenues. The company says it now expects low single digit revenue growth in 2014 against previous hopes for a mid single digit advance.

Better news is order intake is up 9% to £782.7 million and a strong performance from its civil aerospace arm (selling flight displays and wheels to the likes of Airbus and Boeing) which gives the company 'confidence in the medium-term outlook'. This is reflected in an 8% hike in the dividend to 4.25p per share. It is no surprise the market has little patience though given a patchy track record which saw the company warn on profits last November.

MGGT - Comparison Line Chart (Rebased to first)

Investec puts its add recommendation and 530p price target under review. It comments: 'Interims were worse than expected with earnings before interest, tax and amortisation (EBITA) of £151 million vs our £166 million.'

'The outlook statement was mixed, but given slower growth assumptions (circa 2% full year 2014 organic constant currency revenues) and a range of issues, including at Heatric (Energy), we are likely to lower our full year 2014 earnings per share (EPS) forecast by 7% to 8%, 'the analysts continue. 'This still leaves a heavy second half bias.'

Cantor retains faith in the story and stays at buy with a 590p price target. Analyst Andy Chambers says: 'The market is likely to take the shares lower, with recent bid speculation having dissipated. However, we are encouraged by the order intake and expectations of improved second half momentum.'

Issue Date: 05 Aug 2014