The share price of the FTSE 250-listed Spirent Communications PLC (GB:SPT) declined after the company warned of a weaker outlook for the full year. The company reported lower demand and sales in its Q3 trading update, considering the tougher market conditions and reduced spending from China.
Pick the best stocks and maximize your portfolio:
- Discover top-rated stocks from highly ranked analysts with Analyst Top Stocks!
- Easily identify outperforming stocks and invest smarter with Top Smart Score Stocks
The market responded unfavorably, causing a 31.6% decline in shares on Wednesday, making it the biggest decliner on the FTSE 250 index. The stock also hit its lowest mark since 2018. Overall, the shares have lost more than 60% of their value in trading year-to-date.
Based in the UK, Spirent Communications is a global company providing testing solutions and technology services. The company caters to multiple industries such as automotive, government, financial, healthcare, and many more.
Weaker Outlook
Spirent mentioned that its major customers were postponing spending and technology investments, prompting the company to revise its short-term outlook. Consequently, Spirent’s order intake for the initial nine months of the year witnessed a 24% decline compared to the corresponding period last year, with a projected revenue decrease of approximately 20%.
The company does not expect any improvement in its sales performance for the remainder of 2023. This is expected to significantly impact the operating profit for the full year, although specific guidance was not provided.
On a positive note, the company expressed confidence in future growth driven by the demand for 5G services. It anticipates sustained growth in core network spending, particularly in areas like high-speed Ethernet upgrades and cloud computing, for at least the next four years.
Is Spirent a Good Stock to Buy?
As per the consensus among analysts on TipRanks, SPT stock has been assigned a Moderate Buy rating. The company’s ratings consist of two Buy and one Hold recommendations. The Spirent share price target is 242p, which is around 168% above the current share price.
