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Investing.com -- RBC analysts on Tuesday downgraded TT Electronics Plc (LON:TTG) stock rating to Sector Perform from Outperform over a quartet of uncertainties, including change in chief executive officer.
The unexpected promotion of CFO Eric Larkin to interim CEO, following Peter France’s departure after a brief tenure, has raised questions about the company’s leadership stability. The board is considering Larkin for the permanent CEO position but is also looking externally, adding to the executive suite’s unpredictability.
Shares of TT dipped slightly by 0.14%.
RBC also noted that operational challenges persist at TT’s Cleveland site, with self-help efforts yielding slower-than-anticipated benefits, prompting the company to seek external consultancy support.
Additionally, the Components business, which contributes to around 15% of group sales, is deemed sub-scale by the board, leading to a review of potential options for this segment.
RBC also flagged that the trading environment for TT has become increasingly uncertain due to trade tariffs, with the company revising its FY25 EBITA outlook to £32-40m, down from the previous guidance of £40-46m.
This revision reflects the potential impact on demand and the risk it poses to the company’s financial performance. TT also faces workforce concerns, with approximately 25% of its employees based in Mexico, where trade policies could significantly affect operations.
Analysts have adjusted their forecasts accordingly, with a slight bias above the midpoint of the new guidance range, in line with broader sector assumptions regarding the impact of tariffs. However, the 2025 earnings per share (EPS) estimate has been reduced by 16%.
As a result, the price target for TT’s stock has been lowered to 85p from the previous 140p, now targeting a P/E ratio of 7x for 2025 estimates, which represents a roughly 35% discount to the 20-year average of 11x.