Aerospace, defense and energy group Meggitt (MGGT) is among the main fallers on the FTSE 100 as investors cash in on the new year's rally in the stock amid publication of a respectable – if hardly stellar – set of full-year results.
The key point of interest is that Meggitt suggests growth in US military spending could improve from 2016. Theoretically that should have sustained the share price rally seen since November 2014, but investors can be creatures of habit and publication of results is often the trigger to take profits in stocks.
Shares in the Christchurch-headquartered £4.6 billion cap sheds 3.8% to 549.5p after posting a pre-tax profit of £208.9 million in the year to the end of December, down 22% from £269.4 million in 2013 while revenue was down 5% to £1.55 billion.
Meggitt maintains its outlook for 2015 and said it was comfortable with medium-term guidance after reporting an expected 13% fall in underlying annual profit following a tough 2014.
Looking forward, Meggitt is forecasting organic 2015 revenue growth in the low to mid-single digit which is pretty much in line with what it said in November, as demand for parts from civil aircraft suppliers such as Boeing and Airbus grows.
Analyst Rami Myerson at Investec sees solid aftermarket growth supported by accelerating air traffic growth and a lower oil price.
These factors, maintains Myerson, 'should drive improved profitability and cash generation though this could be mitigated by headwinds including sustained military and energy weakness.'