Carillion Plc (CLLN), builder of the 255 million-pound ($400 million) London Olympics media center, fell the most in more than three years as UBS and Liberum cut their recommendations on the stock, citing concerns about margins.
Carillion fell 6.2 percent to 251.4 pence at the close of trading in London, the biggest drop since April 2009. The stock has lost 16 percent this year, giving the Wolverhampton, England-based company a market value of 1.08 billion pounds.
“There is revenue pressure in support services,” Joe Brent and William Shirley, analysts at Liberum, wrote in a note today. “Margins have fallen sharply in the Middle East. U.K. margins seem unsustainably high.” Liberum cut the stock to sell from hold, while UBS cut the stock to sell from neutral.
Carillion said July 4 that in line with expectations first- half revenue will be lower than a year earlier and despite challenging market conditions it is on schedule to meet full- year expectations.
Waning prospects for growth in the company’s support services, “unsustainable” construction margins and low cash conversion will probably weigh on the stock, Benjamin Rosenberger, an analyst at UBS, wrote in a note today.
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